Triangles, Wedges, Flags and Pennants
I’m Meta Matt, Director of Education and welcome to PB University LITE! This is a 50 Class Trading 101 Series geared towards both new and veteran traders alike! We go over everything from Trading Psychology, Technical Analysis, and Options Trading to Commodity Trading, Forex, and more!! This 50 Class series is not designed be taken in order, it is instead designed for traders to browse and pick which classes interest them. I will include the list of classes at the bottom of this page.
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Wedges: A Cautionary Tale
Wedges are formed by converging trendlines, either support and resistance lines coming together (rising wedge) or support and falling resistance lines meeting (falling wedge).
- Rising Wedge (Bearish): Price makes higher highs and higher lows, trapped within a narrowing channel. A break below the support line suggests a potential downside move.
- Falling Wedge (Bullish): Price creates lower highs and lower lows, constricted within a tightening channel. A breakout above the resistance line indicates a possible upside move.
Triangles: Charting the Indecision
Triangles reflect a period of price consolidation, where bulls and bears battle for dominance. The trendlines converge towards a point (apex).
- Ascending Triangle (Bullish): Price creates equal highs and higher lows, forming a triangle pointing upwards. A breakout above the resistance line suggests a potential bullish continuation.
- Descending Triangle (Bearish): Price creates equal lows and lower highs, forming a downward-pointing triangle. A breakdown below the support line indicates a possible bearish continuation.
Flags and Pennants: Taking a Breather
Flags and pennants are continuation patterns, often appearing after a strong price move (the "pole").
- Flags: These resemble a rectangular flag waving in the wind.
- Bull Flag: After an uptrend, price creates lower highs and lower lows within a channel. A breakout above the resistance line suggests a continuation of the uptrend.
- Bear Flag: After a downtrend, price creates higher highs and higher lows within a channel. A breakdown below the support line suggests a continuation of the downtrend.
- Pennants: Shaped like a tapering flag used in celebrations.
- Bullish Pennant: After an uptrend, price forms a symmetrical triangle (equal highs and lows) within a tightening channel. A breakout above the resistance line suggests a continuation of the uptrend.
- Bearish Pennant: After a downtrend, price forms a symmetrical triangle within a tightening channel. A breakdown below the support line suggests a continuation of the downtrend.
Remember: These patterns are indications, not guarantees. Consider them alongside other technical indicators and fundamental analysis for a more comprehensive trading strategy.
PB University LITE Class List
1) Trading Terminology
2) Stock Market Indices
3) Common, Preferred, and Penny Stocks
4) Diversification of Assets
5) Fundamental Analysis Made Easy
6) Technical Analysis Made Easy
7) Risk Management In The Market
8) Portfolio Management
9) How To Follow Market News
10) Trading Psychology
11) Options Explained
12) The Greeks In Options Trading
13) How To Short Sell Options
14) Covered CALLS
15) Spread Trading
16) Online Brokers for Options Trading
17) Implied Volatility Calculators & Tools
18) Protective PUTS
19) Iron Condors
20) Straddles
21) Reading Level 2
22) Taxes
23) Trading Psychology Techniques
24) The Art Of Trading
25) Becoming A Jedi In The Stock Market
26) Futures Trading Explained
27) Commodity Trading 101
28) Regulatory Environments
29) How To Become A Millionaire
30) $100K In 100 Days
31) Wash Sale Rule
32) Behavioral Finance Part 1
33) Behavioral Finance Part 2
34) 5 Charting Indicators
35) Fair Value Gap
36) Insider Trading and Market Manipulation
37) Stock Chart Types
38) Moving Averages 101
39) Base vs Precious Metals
40) Electricity Trading 101
41) Trading Brokers 101
42) 5 Trading Strategies
43) 85% Trading Rule
44) Are Win Rates A Scam?
45) Futures Trading 101
46) ATR Indicator Strategy With The Greeks
47) MACD Indicator 101
48) Bollinger Bands Indicator 101
49) Wedges, Triangles, Flags and Pennants
50) RSI Divergence 101
