Broadening Formation
a.k.a. Megaphone pattern, Broadening top
A chart pattern where swings get wider, with higher highs and lower lows, forming a megaphone shape.
In plain English
A chart pattern where swings get wider, with higher highs and lower lows, forming a megaphone shape.
In a broadening formation, each rally pokes a little higher and each dip sinks a little lower. Draw lines along the tops and bottoms and they spread apart like a megaphone.
It is a picture of a market losing its nerve: volatility rising, nobody in control. Traders treat it as a warning of instability rather than a clean signal, and it is harder to trade than tidier patterns like triangles.
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