Bearish Pennant

Identification Criteria

• A strong, fast, high-volume sell-off forms the flagpole, identical in spirit to the setup for a bear flag.
• The pennant itself is a small symmetrical triangle — converging trendlines rather than the parallel channel seen in a flag.
• Volume characteristically contracts sharply during the pennant, then expands again on the breakdown.
• The pennant should be brief and narrow relative to the flagpole — a consolidation as wide or as long as the pole itself is more likely a genuine symmetrical triangle rather than a pennant.

Formation Logic

The flagpole reflects a burst of intense selling. The pennant represents a brief, tightening pause — both sides quickly agree on a narrowing range — before the underlying selling pressure that drove the pole reasserts itself. The converging shape (versus a flag's parallel channel) reflects a faster, tighter consolidation.

Breakout / Confirmation Rule

Confirmation requires a decisive close below the pennant's lower trendline, ideally on a pickup in volume. A pennant that drags on far longer than the flagpole took to form starts to lose its continuation character and behaves more like an ordinary symmetrical triangle.

Measured-Move Price Target

A commonly used, purely illustrative technique: measure the length of the flagpole (from its start to its low), then project that same distance below the breakdown point.

Common Pitfalls

• Distinguishing a small pennant from a symmetrical triangle in real time can be difficult — context (a clear, sharp flagpole beforehand) and brevity are the key differentiators.
• A pennant that retraces more than roughly half the flagpole is a warning sign the move may be reversing rather than pausing.
• Low-volume breakdowns from the pennant are prone to failure.