“Broadening Tops and Bottoms” are rare and difficult to detect, but they are very reliable patterns. They are also known as “Symmetric Inverted Triangles” or “MegaPhones.” This pattern consists of broadening each swing reversal with larger than the previous swing. The “Broadening top” consists of five swings points and usually the last swing reverses the trend 1 direction that existed prior to the formed pattern. In a “Broadening top” formation, the first – pivot, or turn, must be down, and in a “Broadening bottom” formation, the first pivot, or turn, 1 must be up.
One of the critical points in “Broadening” tops and bottoms pattern is the mid line. In many cases, the rallies/declines stop at the mid line to retest the prior trend line. Usually this is the last swing before a clear breakout/breakdown occurs.
Trade: A trade is taken in the direction of the breakout/breakdown from of the pattern. When a price bar closes outside the pattern in the direction of the breakout/breakdown, and that price bar is followed by a close above the high, or a close below low of the breakout/breakdown price bar, a trade is signaled.
Target: The price objective of the trade is the height of the entire pattern added/subtracted from the breakout/breakdown levels.
Stop: The midpoint in the “Broadening” pattern is the critical point and trades should be protected with a “stop” at this level.