Broadening Formation

DEFINITION of 'Broadening Formation'

A pattern that occurs during high volatility, when a security shows great movement with little direction. The formation is identified by a series of higher pivot highs and lower pivot lows. A trendline drawn over the pivot highs and under the pivot lows frames out the widening pattern. It looks like a megaphone and, in fact, it is also known by that name.

Broadening Formation


BREAKING DOWN 'Broadening Formation'

As the two trendlines diverge from the apex, the pattern resembles a reverse version of a symmetrical triangle. This pattern is considered quite rare, but is useful in helping technicians to identify swing trades, rather than a trend trades.

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RELATED FAQS
  1. How are Pivots interpreted by analysts and traders?

    Find out why traders and analysts use pivots in their analysis of price movements and why pivots can be used to create trading ... Read Answer >>
  2. What trading opportunities do Broadening Formation patterns give to traders?

    Profit from recognizing a broadening formation pattern on a chart that allows you to enter low-risk, high profit potential ... Read Answer >>
  3. How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

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  4. How are Symmetrical Triangle patterns interpreted by analysts and traders?

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    Understand the differences between pivot points and levels of support/resistance in an asset's price movements, both in and ... Read Answer >>
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