Understanding a Pennant Chart Pattern

A pennant, much like a flag, is a continuation pattern that signals a brief consolidation before the prior trend resumes. You typically see a sharp price move, followed by a period of converging trendlines forming a small symmetrical triangle, and then a breakout in the direction of the initial move. For instance, if $US30 was trending upwards and then formed a pennant between, say, 53700 and 53800 before breaking higher, that would be a classic bullish pennant. The target is often estimated by measuring the pole of the initial move and projecting it from the breakout point.