How to read a Bull Pennant
A bull pennant is a strong move up followed by a short pause where the candles get smaller and squeeze into a point. It's a close cousin of the bull flag. The difference is the shape of the pause: a flag drifts in a channel, a pennant tightens into a small triangle.
What it looks like
You need the same sharp pole as a flag, ideally on heavy volume. After it, each high comes in a little lower and each low a little higher, so price coils into a narrowing wedge. Volume should shrink as it tightens.
Pennants are short. On a 1-minute chart many last only a handful of candles. If the coil drags on much longer than the pole took to form, it has stopped being a pennant and is just a stock losing interest.
How traders read it
The trigger is a break above the pennant's upper line, ideally with volume coming back in. Because the range is so tight, the stop under the pennant's low is usually close, which is what makes the setup attractive.
Targets work the same way as a flag: take the height of the pole and project it from the breakout. In practice, many traders scale out at the prior high of day and trail the rest.
When it fails
The common failure is a break out of the bottom of the coil instead of the top. Tight ranges break both ways, and the pattern only tells you that a move is coming, not which direction it goes.
Also be careful with pennants that form right under a round number or the high of the day. Sellers often sit there, and the breakout can stall a few cents above the line.
Practice it
Replay an example above and stop it as the pennant starts to tighten. Draw the two lines, pick your entry and stop, then play it forward.
Educational content only, not trading advice. Patterns describe what price did, not what it will do next.