The Broadening Formation (megaphone) has diverging trendlines — higher highs and lower lows. Volatility and disagreement are increasing. It often appears at major market tops and is one of the most difficult patterns to trade.
Swing highs at 105, 108 and 111, swing lows at 95, 92 and 89: each swing reaches further than the last (widths 10, 16 and 22). There is no measured move — the pattern describes growing volatility and disagreement, not a direction.
The example data
The turning points the daily closes run through, in straight lines between them; high and low are half a point either side of each bar.
| Day | Close |
|---|---|
| 0 | 100 |
| 3 | 105 |
| 6 | 95 |
| 9 | 108 |
| 12 | 92 |
| 15 | 111 |
| 18 | 89 |
| 21 | 95 |
- There is no clean entry: by the time three widening swings are visible, the next one is already large.
- Widening swings mean wider stops, so position size has to shrink to keep the same risk.
- Edwards and Magee treated it as a mostly bearish top; later counts are mixed.
def swings(s, n=2): # a swing high (low) is the extreme of the 2n+1 bars around it
w = s.rolling(2 * n + 1, center=True)
return s[s == w.max()], s[s == w.min()]
c = df['close']
highs, lows = swings(c)
hi, lo = highs.iloc[-3:], lows.iloc[-3:]
broadening = hi.is_monotonic_increasing and lo.is_monotonic_decreasing
width = (hi.values - lo.values) # how far each swing reachedAssumes import numpy as np, import pandas as pd, and a DataFrame df with columns open, high, low and close for the data above.
- Technical Analysis of Stock Trends, R. D. Edwards & J. Magee, 1948 (later editions revised by W. H. C. Bassetti)
- Encyclopedia of Chart Patterns (2nd ed.), T. N. Bulkowski, Wiley, 2005 — success and failure rates from large counts of patterns
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