Triangles, wedges, and flags are all consolidation patterns that form as a trend pauses to digest its prior move. Unlike head and shoulders or double tops, which signal reversal, most of these patterns are continuation patterns — they typically resolve in the direction of the trend that preceded them, though exceptions exist.
Triangles
- ▸Symmetrical triangle: a descending upper trendline and ascending lower trendline converge, reflecting decreasing volatility with no clear directional bias until the breakout.
- ▸Ascending triangle: a flat upper resistance line with a rising lower trendline, showing buyers becoming more aggressive on each dip — typically resolves upward.
- ▸Descending triangle: a flat lower support line with a falling upper trendline, showing sellers becoming more aggressive on each rally — typically resolves downward.
Wedges
A wedge looks similar to a triangle but both trendlines slope in the same direction. A rising wedge — both lines sloping up, converging — usually appears after an uptrend or within one and tends to break downward, since the narrowing range signals fading upside momentum despite higher highs. A falling wedge — both lines sloping down, converging — tends to break upward for the mirror reason. Wedges can appear as either continuation or reversal patterns depending on where they form in the broader trend.
Flags and Pennants
Both form after a sharp, near-vertical move called the flagpole. A flag is a small, roughly parallel channel that slopes gently against the prior move; a pennant is a small symmetrical triangle. Both are typically short-lived — a handful of candles — and resolve as a continuation of the flagpole's direction, often with similar speed and magnitude.
Rule Set for Breakout Entries
| Pattern | Typical bias | Stop placement |
|---|---|---|
| Ascending triangle | Bullish breakout | Below the last swing low inside the pattern |
| Descending triangle | Bearish breakout | Above the last swing high inside the pattern |
| Rising wedge | Bearish breakout | Above the wedge's upper trendline |
| Falling wedge | Bullish breakout | Below the wedge's lower trendline |
| Flag / pennant | Continuation of flagpole direction | Beyond the opposite side of the flag channel |
Measuring the Target
For triangles and wedges, project the pattern's height at its widest point from the breakout price. For flags and pennants, the flagpole's length is typically projected from the breakout point — the assumption being the continuation move matches the initial impulse.
Triangles and wedges narrow toward an apex, and price often pokes through a trendline briefly before reversing back inside. Require a full candle close beyond the boundary, and ideally increasing volume, before committing.
Common Mistakes
- ▸Forcing a pattern label onto messy price action that doesn't actually respect clean trendlines.
- ▸Trading a symmetrical triangle breakout in the counter-trend direction without extra confirmation, since these are genuinely bidirectional.
- ▸Holding a flag or pennant position too long after the continuation move plays out, since these patterns imply a fast, short-lived move rather than a new sustained trend.