Trend
There must be a trend on the market to talk about a trend reversal pattern.
- Role: Reversal
- Expected trend: Bearish
- Previous tren: Bullish
- Reliability: Moderate
- Pattern: Broadening Pattern
Ascending Broadening Pattern Example
Bottom horizontal line
There must be two minimum values to form the bottom line. These minimum points are not necessarily in line, but they must move within a given range. A certain distance must be between the maximum and minimum values.
Top diverging line
There must be at least two maximum values to form the top diverging line. These maximums are increasing over time and they have a given distance between them. If the next wave’s maximum points are in the same height or above the previous ones, the pattern cannot be a broadening pattern.
Duration
The duration can last from a few weeks to a few months.
Volume
The trading volume decreases as the pattern develops. There can be a bottom breakout only if there is a high volume. A volume-based confirmation is not necessary, but highly recommended.
Target price
The height of the largest peak is put on the breakout point vertically.
