What is a broadening top pattern?

Broadening top (a.k.a. a megaphone pattern) is technical analysis chart pattern describing trends of stocks, commodities, currencies, and other assets. Broadening Top formation appears much more frequently at tops than at bottoms. Its formation usually has bearish implications.

How do you trade a broadening top?

Enter your trade as soon as the price rises below the broadening s lower trend line. Once the support breaks, place a buy-order only after the price retests that trend line. Now the broken support line will become the resistance line. Place your stop loss above the new Resistance area.

Is a broadening wedge bullish or bearish?

An ascending broadening wedge is a bearish chart pattern (said to be a reversal pattern). It is formed by two diverging bullish lines. An ascending broadening wedge is confirmed/valid if it has good oscillation between the two upward lines.

How do you trade a rising broadening wedge?

Trading In Ascending Broadening Wedge A swing trader will enter the market when the price line is rising and execute the trade when it touches the upper trendline while placing a stop-loss tightly at the lower trend line level. Most traders will look out for broadening tops and bottoms.

Is a megaphone bullish?

Bullish: The rare Megaphone Bottom—a.k.a. Broadening Pattern—can be recognized by its successively higher highs and lower lows, which form after a downward move. The bullish pattern is confirmed when, usually on the third upswing, prices break above the prior high but fail to fall below this level again.

Is megaphone bullish or bearish?

What is ascending broadening wedge pattern?

The ascending broadening wedge pattern indicates a potential selling opportunity either after an uptrend or throughout an existing downtrend. The entry (sell order) is placed if the price breaks below the bottom side of the wedge or if the price finds resistance at the lower trend line.

How do you trade a descending broadening wedge?

In order to make the descending broadening wedge a valid pattern, price action should be creating lower highs. Support Line: A minimum of two lows are required to draw the lower support trend line. Price action should be creating lower lows in order for the pattern to be valid.

Is an ascending broadening wedge bearish?

Ascending broadening wedge is one such formation. After the manifestation of the ascending wedge pattern in an uptrend, the asset price trend reverses downtrend. Hence, it is a bearish reversal pattern. An ascending broadening formation forms an inverted triangle shape in the price chart.

How do you trade broadening bottoms?

Strategy 1: Trade as soon as the price breaks out of the Broadening bottoms. Enter the trade when the candlestick has closed above the Broadening upper trend line. Place your stop loss on the other side of the Broadening bottoms, just below its lower trend line.

What is broadening top pattern?

Broadening top (a.k.a. a megaphone pattern) is technical analysis chart pattern describing trends of stocks, commodities, currencies, and other assets. Broadening Top formation appears much more frequently at tops than at bottoms. Its formation usually has bearish implications.

What is broadening top formation in stocks?

Broadening Top formation appears much more frequently at tops than at bottoms. Its formation usually has bearish implications. It is a common saying that smart money is out of market in such formation and market is out of control.

What happens when a pullback in a broadening top pattern?

A quick rise starts at A and leads to the broadening top chart pattern. Price oscillates up and down in broadening turns before dropping out of the bottom of the chart pattern and staging a downward breakout. A pullback ensues, allowing price to recover and traders to exit before the decline resumes.

Is the broadening top a good or bad indicator?

The broadening top is a poor performer. The break even failure rate is above average and the average rise or decline is below average. Partial rises and declines help predict the breakout direction and allow a trader to enter the stock sooner, but also increase the risk of failure.