Trend

There must be a trend on the market to talk about a trend reversal pattern.

• Role: Reversal
• Expected trend: Bullish
• Previous tren: Bearish
• Reliability: Moderate
• Pattern: Broadening Pattern

Descending Broadening Pattern Example

Bottom diverging line

There must be two minimum values to form the bottom diverging line. These minimums are decreasing over time and they have a given distance between them. If the next wave’s minimum points are in the same height or above the previous ones, the pattern cannot be a broadening pattern.

Top horizontal line

There must be at least two maximum values to form the top line. These maximum 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.

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 an upper 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.