Broadening Tops and Bottoms Chart Patterns
Broadening Tops Chart Pattern
- This pattern is observed after a huge upward trend.
- The price at the start of the pattern is higher than the price at the start of the trend.
- Higher peaks and lower valleys are observed during the pattern.
- The top trendline slopes upwards and the bottom trendline slopes downwards.
- There should be at least five trendline touches within the pattern, i.e., three top trendline touches and two bottom trendline touches or vice versa.
- The breakout can occur in either direction when the price cuts through the established trendline. Trend continual or trend reversal depends on the direction of the breakout.
- The pattern is given the name ‘broadening tops’ as the channel enlarges before breakout, in an upward trend.
- Traders should look into the probability of trend continual and trend reversal, before entering the trade. There is an upward trend 61% of the time.
- Traders can start buying when the price rebounds higher for one last time in the channel, before breaking out of the trendline. Similarly, traders can sell when the price rebounds lower for one last time before breaking out of the trendline.
Broadening Bottoms Chart Pattern
- It is similar to the broadening tops chart pattern, the only difference is the trend.
- This pattern is observed after a huge downward trend.
- The price at the start of the pattern is lower than the price at the start of the trend.
- Higher peaks and lower valleys are observed during the pattern.
- The top trendline slopes upwards and the bottom trendline slopes downwards.
- There should be at least five trendline touches within the pattern, i.e., three top trendline touches and two bottom trendline touches or vice versa.
- The breakout can occur in either direction when the price cuts through the established trendline. Trend continual or trend reversal depends on the direction of the breakout.
- The pattern is given the name ‘broadening bottoms’ as the channel enlarges before breakout, in a downward trend.
- Traders should look into the probability of trend continual and trend reversal, before entering the trade. There is an upward trend 59% of the time.
- Traders can start buying when the price rebounds higher for one last time in the channel, before breaking out of the trendline. Similarly, traders can sell when the price rebounds lower for one last time before breaking out of the trendline.
89 Comments