Broadening Formation

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What is it ?

When the trendlines,from left to right,converge…..it's called a triangle.When the trendlines start from a point and diverge as we go from left to right of the chart,that's called a Broadening Formation.

One interesting feature

In a triangle,volume decreases within the pattern.In a Broadening Formation,volume expands along with wider price swings.

Traits

  • This is a BEARISH pattern.
  • Due to its divergence,the stock makes a high and a low,then high2 will take out previous pivot high,then prices fall to low2,which takes out the previous pivot low.Then prices move upwards to form high3,which is higher than high2 or high1(not necessary,can even be same height at times).
  • Three successive higher peaks,and two declining lower troughs complete this pattern.Confirmation is when the low 2 is taken out as prices start making new lows.

Reference

Investopedia


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