The pause inside a move
Flags, pennants and wedges are all the same idea: a sharp move, then a short consolidation against it, then continuation.
- Flag — the consolidation is a small parallel channel sloping against the move
- Pennant — the consolidation is a tiny triangle
- Wedge — the consolidation slopes against the move and narrows
The distinctions are cosmetic. What matters is the sequence, and it is the same in all three: impulse, shallow pause, resumption.
What the shape records
After a sharp move, two groups act:
- Traders who caught the move take partial profit — supply against the trend
- Traders who missed it wait for a pullback — demand supporting it
Those two forces produce a shallow, orderly drift against the direction of the impulse. The move does not reverse because the people who missed it are still waiting.
The consolidation being shallow is the whole signal. A deep pullback means the profit-takers outnumbered the people waiting to get in, and the move is losing its character.