Broadening FormationsTechnical Analysis
Broadening formations are the opposite of the triangle formation. Instead of narrowing over time, broadening formations widen over time. Trendlines drawn on the formation will divergence from each other, moving away over the long term.
Each new swing in the formation gets longer as it moves from top to bottom. Each peak be successively higher, and each trough will simultaneously be lower than the previous trough. The unpredictability of the formation makes it difficult to trade. Volume increases as each new swing occurs, signifying an overly reactional and emotional market that is trying to drive the trend in two differing directions.
Completion of the pattern occurs with a clean break to the top or the bottom of a pattern. A trough that is lower than the previous troughs then forms a peak that is nowhere near the height of the previous peaks will likely break to the bottom. A peak higher than the previous peaks, followed by a trough higher than previous troughs is more likely to break to the top.
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International Economic Analysis:
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- Mandates of Central Banks versus Expectations
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- List of Technicals to Look for While Trading
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