Courses / Chart Patterns Masterclass

Broadening Formations and Megaphones

Expanding highs and lows show rising volatility and indecision.

A broadening formation has diverging trendlines: higher highs and lower lows. It reflects emotional, volatile markets and is often found near tops.

It is difficult to trade because stops get hit easily. Many traders only trade the breakout or avoid it.

Treat it as a warning that risk is high and reduce position size.

Key takeaways

• Diverging trendlines, rising volatility
• Hard to trade, stops get hit
• Reduce size or avoid

Quiz

• A broadening formation shows: Answer: Rising volatility. Price swings expand.
• Traders often: Answer: Reduce size or avoid it. Risk is elevated.
• The trendlines are: Answer: Diverging. They spread apart.

Educational content, not financial advice.