The pennant chart pattern is a continuation pattern that forms when there is a large move in a security, known as the flagpole, followed by a consolidation period with a support and resistance trendline converging – the pennant – followed by a breakout in the same direction as the initial large move, representing the second half of the flagpole. It is an important pattern for technical analysts to recognize, as it can indicate a potential continuation of a bullish or bearish trend. It is crucial to observe volume in the pennant – the consolidation period should have lower volume, and a breakout should occur on higher volume. Most traders use pennants in conjunction with other forms of technical analysis that act as confirmations.