Pennant
A pennant is a type of financial instrument that is used to signal a change in the market trend. It is a chart pattern that is formed when the price of a security moves in a sideways direction for a period of time. The pennant is formed when the price of the security moves in a narrow range, usually between two parallel trendlines. The pennant is considered to be a continuation pattern, meaning that it signals that the current trend is likely to continue.
History of the Term
The term “pennant” was first used in the early 1900s by Charles Dow, the founder of Dow Theory. Dow Theory is a form of technical analysis that is used to identify and analyze trends in the stock market. The term “pennant” was used to describe a chart pattern that was formed when the price of a security moved in a sideways direction for a period of time. The term has since been adopted by other technical analysts and is now widely used to describe a chart pattern that signals a change in the market trend.
Comparison Table
| Pattern | Formation | Signal |
|---|---|---|
| Pennant | Sideways movement | Continuation |
| Flag | Sharp price movement | Reversal |
Summary
A pennant is a chart pattern that is formed when the price of a security moves in a sideways direction for a period of time. It is considered to be a continuation pattern, meaning that it signals that the current trend is likely to continue. The term “pennant” was first used by Charles Dow in the early 1900s and has since been adopted by other technical analysts. For more information about this term, you can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Flag
- Head and Shoulders
- Double Top
- Double Bottom
- Triangle
- Wedge
- Cup and Handle
- Rounding Bottom
- Gap
- Trendline
