Broadening (MegaPhone) Pattern

September 29, 2010 · Posted in Broadening Patterns, MegaPhone · Comments Off 

Broadening (MegaPhone) patterns are rare, but they are very reliable patterns. They are visually easy to detect as the price makes higher highs and lower-low Swings. The Upper and Lower Swings are connected by diverging trendlines. In Broadening Tops, the 1st Pivot should be on the Upper Trendline (in Broadening Bottoms, the 1st SwingPivot is lower trendline). The tradable pivots are (4) and (5). More reliable pivot is (4) as the pattern is still evolving. From Pivot 5, the pattern is either fall to lower-trendline or breakout and become a Continuation pattern of prior trend. The failure of 5-6 leg usually occurs at the mid Channel level. Aggressive traders could trade Pivot 3, but this may be not highly reliable as pattern is not fully formed and the Lower-Trend line is clearly not defined.