Just reviewing an interesting chart pattern and I want to share my understanding and practical experience with the pennant pattern.

This pattern is actually quite common, especially on short-term charts. The basic logic is as follows: after a sharp upward or downward move, the price begins to consolidate within a gradually narrowing range, forming a small symmetrical triangle. This triangle is what we call a pennant. Many people tend to confuse it with a flag or a symmetrical triangle, but if you look closely, the key feature of a pennant is that it must be preceded by a strong, steep trend. The strength of this prior move often indicates the potential strength of the subsequent breakout.

My trading experience tells me that the pennant pattern usually appears around the midpoint of a trend. At this point, the market is consolidating, waiting for the next directional confirmation. The consolidation period generally does not exceed three weeks. If it lasts longer, it may evolve into a larger pattern or simply fail.

Regarding how to trade this pattern, I usually consider entering at several points. The most straightforward approach is to wait for a breakout and then follow the original trend direction immediately. Alternatively, you can enter when the pattern's high or low is broken, or wait for a retest after the initial breakout for further trend signals. Risk management is very important; stop-losses are typically placed outside the trendline.

Honestly, this pattern is not foolproof. I’ve looked at some research data, and the failure rate is not low—about 54% of the time, the price breaks in the opposite direction. The success rate is around 30-something percent. That’s why I always emphasize that relying solely on a single pattern for trading is not enough; it must be combined with other technical indicators and risk management to improve the win rate.

The most critical point is that the reliability of the pennant pattern largely depends on the quality of the preceding trend. If the prior move was steep and forceful, the breakout usually continues with that momentum. Conversely, if the trend was mild, the breakout may lack strength. So when choosing this pattern, I always check whether the previous trend was strong enough. This helps increase the probability of success.