Flags and pennants are similar in nature. Though they may be defined by their differing shape, their practical use is near identical. They are simply types of ‘channels’ which follow on from easily defined directional moves. If you like, a halt in the strong directional move which precedes, awaiting a potential continuation of the original trend. The concepts of channels, once defined, is to simply identify the point at which the price breaks out of, or exceeds, the boundary of the channel with the expectation of a continued move in the direction of that ‘break out.’ Flags and pennants represent a change from ‘directional’ movement to ‘consolidation.’