Broadening Bottom/Top

  • Broadening Bottoms form on a downtrend while Broadening Tops form on an uptrend
  • Both have a megaphone-like appearance with 5 alternating touches: 2 minor lows and 3 minor highs
  • Volume usually rises as prices increase, but falls when prices decrease
  • Effect A: A breakout from the third minor high can send the stock upwards — at times a partial decline or pullback would be experienced near the breakout, but the decline would not be low enough to make a 6th alternating touch.
  • Effect B: A breakdown from a possible 6th alternating touch (minor low) can send the stock downwards — at times a partial rise or pullback would be experienced near the breakdown.
Broadening Bottom-Top