A broadening formation is an example of a pattern of strength and is a very useful tool in predicting the likelihood of a reversal in the direction of the current trend. When found in an uptrend, it does not indicate a continuation of the trend, but rather a near-term reversal of the price action.
The fluctuation within price producing a series of higher highs and lower lows cause the broadening formation. As time passes, it widens permanently and generally thought to be found only in topping formations where it increasingly perceived as the result of unrealistic investor expectations.
Unlike the majority of other patterns, the wider shapes feature increasingly wide ranges and fluctuate greatly over time. As the share price rises, so does the volume level, which usually indicates a bullish position. There is a danger of extinction, which ultimately leads to collapse.
A
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B
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C
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