Concept
Broadening Formation
Broadening Formation, also known as megaphone, right-angled, broadening wedge, is a Chart & Candlestick Patterns concept. The Library holds 1 implementations, each one a working definition you can pull into Quant.
Top Broadening Formation indicators
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What is a Broadening Formation?
A broadening formation, the megaphone, is a pattern of expanding swings: successive higher highs and lower lows contained by two diverging trendlines. It is the structural opposite of a triangle: instead of coiling toward an apex, each swing overshoots the last and volatility widens. Right-angled variants flatten one boundary (a flat top against falling lows, or a flat bottom against rising highs), and the broadening wedge tilts both diverging lines in the same direction.
Its meaning is genuinely contested. The classical literature, from Schabacker through Edwards and Magee, treated broadening tops as bearish reversal structures typical of emotional, late-stage markets; modern pattern references catalogue both reversal and continuation outcomes depending on which boundary finally breaks. What the formation does establish is regime, not direction: disagreement is widening, stops on both sides are being run, and tight-stop entries are fighting the environment.
How traders use it
- Fading the boundaries: selling the upper trendline and buying the lower with stops beyond the line, sized for the fact that each swing tends to exceed the previous one.
- Trading the eventual resolution: waiting for a decisive close through one boundary and taking direction from that break, since the pattern itself does not commit either way.
- As a regime flag: expanding swings mark a poor environment for tight stops and for adding to positions, so some traders reduce size or stand aside until the range stops widening.
Related concepts · Continuation chart patterns
Concept family
Chart & Candlestick Patterns
84 concepts mapped · 46 in the Library
Broadening Formation FAQ
Is a broadening formation bullish or bearish?
Neither by default. Classical charting leaned bearish for broadening tops after long advances, but modern pattern references document both reversal and continuation resolutions. Most practitioners take direction from the boundary that finally breaks, and until then read the formation as rising volatility and two-sided stop-running rather than a directional forecast.
How do you trade a megaphone pattern?
Three common approaches: fade the diverging boundaries with stops beyond them, wait and trade the eventual break of one side, or stand aside entirely. The expanding swings punish tight stops and mid-range entries, so whichever approach is chosen, locating entries at the extremes or on a confirmed break matters more here than in most patterns.
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