Broadening Formation
A pattern used in technical analysis to predict the likelihood of a reversal in the direction of the current trend. It is identified by finding diverging trendlines that connect a series of widening peaks and troughs. The most common type of broadening formation is found at the end of a prolonged uptrend and is used to predict a move lower.
Investopedia Says:
As the two trendlines diverge from the apex, the pattern resembles a reversed version of a symmetrical triangle. This pattern is considered quite rare, but the signal it generates is deemed to be very reliable. As shown by the last candle on the chart above, many technical traders will use candlestick patterns such as a doji to confirm the reversal predicted by the broadening formation. Related Terms:
Candlestick
Consolidation
Doji
Indicator
Reversal
Symmetrical Triangle
Technical Analysis
Trend
Trendline |