Broadening & Expanding Patterns
Overview
Broadening patterns, also called megaphone or expanding patterns, form when price creates progressively higher highs and lower lows, diverging rather than converging. These patterns reflect increasing volatility and disagreement between buyers and sellers, often appearing during periods of uncertainty or at major market turning points. Broadening patterns are among the most challenging formations to trade because they lack the contracting structure of typical chart patterns.
Key Concepts
Price swings expand with each successive high and low, creating a widening range. The pattern resembles an inverted triangle or megaphone shape. Broadening tops form at the end of uptrends and are bearish reversal patterns. Broadening bottoms form at the end of downtrends and are bullish reversal patterns. The pattern reflects increasing emotional trading and indecision. Volume typically increases as the pattern develops, confirming rising volatility. Five swing points (three on one side, two on the other) define a complete broadening formation.
Entry Signals
Trade the reversals at the pattern boundaries — buy at the lower trendline and sell at the upper trendline. Enter after the fifth swing completes, anticipating that the pattern is now likely to resolve. Breakout entries when price closes decisively beyond one of the expanding boundaries. Fade extreme moves back toward the pattern's midline when boundary touches coincide with divergence.
Exit Signals
Target the opposing boundary when trading bounces within the pattern. Stop just beyond the boundary that triggered the entry. Exit boundary-trading positions if the breakout occurs with strong volume against your direction. Pattern resolution target: the widest point of the pattern projected from the breakout.
Best Timeframes
4H, Daily, Weekly
Pro Tips
Broadening patterns are best left to experienced traders because the expanding volatility makes risk management difficult. The most reliable trade is a fade of the fifth swing point, as the pattern tends to resolve after five touches. If you are not confident in the pattern count, stand aside until a clear breakout occurs with strong volume confirmation.
More Topics in This Category
Head & Shoulders
The head and shoulders is one of the most reliable reversal patterns in technical analysis. It consists of three peaks — a higher central peak (the head) flanked by two lower peaks (the shoulders) — connected by a neckline drawn across the reaction lows. A break below the neckline confirms the reversal, with the measured target equal to the distance from the head to the neckline projected downward from the breakout point.
Rectangle Patterns
Rectangle patterns form when price trades sideways between two parallel horizontal lines — a clearly defined support and resistance. Rectangles represent a period of equilibrium where buyers and sellers are evenly matched. The pattern resolves when price breaks decisively through one of the boundaries, often continuing in the direction of the prior trend.
Bull & Bear Flags
Bull and bear flags are continuation patterns consisting of a sharp price move (the flagpole) followed by a brief, counter-trend consolidation channel (the flag). Bull flags slope downward after an upward pole; bear flags slope upward after a downward pole. These patterns represent a pause in strong momentum before the trend resumes, and they are among the most commonly traded continuation setups.
Ascending & Descending Triangles
Ascending triangles form when price creates a horizontal resistance line at the top and a rising support trendline at the bottom, indicating buyers are becoming more aggressive. Descending triangles feature a horizontal support floor with a declining resistance trendline, suggesting sellers are gaining control. Both patterns are typically continuation patterns that resolve in the direction of the prevailing trend with a measured move target equal to the triangle's height.