Broadening Formation

A pattern used in technical analysis to predict the likelihood of a reversal in the direction of the current trend. It is identified by finding diverging trendlines that connect a series of widening peaks and troughs. The most common type of broadening formation is found at the end of a prolonged uptrend and is used to predict a move lower.

As the two trendlines diverge from the apex, the pattern resembles a reversed version of a symmetrical triangle. This pattern is considered quite rare, but the signal it generates is deemed to be very reliable. Many technical traders will use candlestick patterns such as a doji to confirm the reversal predicted by the broadening formation.