I've noticed that many newcomers in crypto overlook one of the most effective technical analysis patterns — the pennant figure. It’s truly a powerful tool that triggers more often than it seems at first glance.

A pennant is a continuation pattern that forms after a sharp price movement. Imagine: the price suddenly moves up or down (this is the flagpole), then begins to consolidate within a narrow range, forming a small symmetrical triangle. Usually, this takes a couple of weeks, at most three. If it takes longer — it’s no longer a pennant, but something else.

The main feature of the pennant pattern in trading is that the breakout occurs in the direction of the previous trend. See aggressive growth? Then consolidation? Expect a breakout upward. The same applies to a decline. The key is the quality of the movement before the pennant. The more aggressive the movement, the stronger the breakout.

How to use this? There are several entry options. First — enter right at the breakout of the pennant boundaries in the trend’s direction. Second — wait for a breakout of the pattern’s extreme point. Third — enter on a pullback after the initial breakout. Each trader chooses what suits them.

To calculate targets, use the height of the flagpole. Measure the distance from the start of the sharp move to the point where the pennant begins, then project this distance from the breakout level. That gives you your target zone.

But honestly? Not all pennants work perfectly. Studies show that unsuccessful breakouts happen in 54% of cases, and the success rate hovers around 32-35%. It doesn’t sound great, but that’s average. If you combine the pennant with other analysis tools, your chances increase.

Bullish pennants occur during an uptrend — sharp rise, then consolidation, then a new rise. Bearish — the opposite, sharp fall, pause, then continuation downward. You should trade them the same way, just in different directions: long for bulls, short for bears.

A pennant differs from similar patterns. From a flag — in the shape of consolidation (a pennant is a triangle, a flag is a rectangle). From a symmetrical triangle — in size and the requirement of a strong previous trend. From a wedge — a wedge can be a reversal, while a pennant is always a continuation.

In general, trading the pennant pattern is a classic approach that works if you understand its essence. The main thing is risk management, not entering blindly, and always setting a stop-loss. I usually place it slightly above the resistance line for a bearish pennant and below support for a bullish one.

If you’re interested in experimenting with this pattern in real conditions, you can find plenty of active pairs for practice on Gate. Start by analyzing historical data across different timeframes — and you’ll see how often pennants appear on charts.