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What is the difference between a triangle and a pennant?

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Triangles and pennants look the same, but their timeframes and expectations are different. Pennants are short-term patterns that form after a steep advance or sharp decline. Pennants typically extend 1-3 weeks, after which a continuation of the prior move is expected. Anything longer is probably a triangle. Triangles are medium-term or long-term patterns that form independent of the prior move. There are no directional expectations. It depends on the direction of the trendline break.

The first chart shows Crown Castle (CCI) with a bullish pennant in March 2009. Notice that the stock surged with a sharp advance in early March and then consolidated with the pennant. Pennant represents a rest after a steep surge or sharp decline. The contracting trendlines reflect a narrowing range as the pennant unfolds. The subsequent break signals a continuation of the prior move. In this case, the upside breakout signaled a continuation of the prior advance.

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Triangles form as the range contracts over a period greater than three weeks. As noted above, they can form at any place on the chart: after an advance, after a decline or as part of a trading range. Chubb (CB) formed a triangle in December that lasted 4-5 weeks. After a rather wide range, the stock formed a lower high and a higher low as the range contracted. Triangles are neutral until the trendline break. In this case, Chubb broke the lower trendline for a bearish signal. 

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For more on pennant, triangles and other patterns, see Technical Analysis of the Financial Markets by John J. Murphy.

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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I concur wholeheartedly with your comments as they apply to daily charts, the charts that you were using. However, I think it is worth noting that the characterization of a pattern as a triangle or pennant can depend on the timeframe one is looking at. For example, a triangle on a daily chart can be a pennant on a weekly chart or a pennant on a daily chart can be a triangle on an hourly chart. When a triangle is a pennant on a longer term chart, then there would be a directional expectation for the triangle since pennants have directional expectations.
Good point. A flag or pennant can be based on the number of bars. On a daily chart, 1-3 weeks would be 5-15 bars. Therefore, a pennant on a weekly chart could be 5-15 weeks. Thanks for the comment.
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