Ascending Broadening Wedge

The Ascending Broadening Formation is a chart pattern defined by two diverging upward-sloping trendlines:

• Support line: rising, connecting higher lows.
• Resistance line: rising more steeply, connecting higher highs.
• The channel expands over time, giving the appearance of a “megaphone” tilted upward.
• Volume often increases with each swing, reflecting rising volatility.

Unlike rising wedges (which converge), broadening formations expand outward. This version tilts bullish but can resolve either direction.

The ascending broadening formation reflects a battle between increasingly aggressive buyers and sellers:

• Early on, buyers push higher, but sellers respond by selling into strength at higher prices.
• Each swing grows larger, reflecting escalating volatility and indecision.
• Bulls view higher highs and higher lows as evidence of uptrend strength.
• Bears note the erratic swings and loss of control, waiting to sell breakdowns.

Eventually, one side wins:

• Upward break: Buyers overwhelm sellers, pushing price into acceleration.
• Downward break: Bears exploit overextension, often triggering sharp reversals.

The pattern often appears near market tops, reflecting emotional excess and instability.

Bulkowski’s findings:

• Downward break frequency: ~58%.
• Upward break frequency: ~42%.
• Average decline after breakdown: ~19%.
• Average rise after breakout: ~29%.
• Failure rate: ~14%.
• Pullback/throwback frequency: ~56%.

Despite rising price structure, the formation is statistically bearish more often than bullish.

Entry:

• Buy on breakout above resistance with strong volume.
• Short on breakdown below support with volume.

Stop loss:

• For longs: below most recent swing low.
• For shorts: above most recent swing high.

Targets: Height of pattern at breakout point projected in direction of break. Secondary = major support/resistance zones.

Invalidation: Opposite breakout cancels thesis.

• False moves: Breakouts without volume often reverse.
• Overtrading swings: Temptation to buy/sell each oscillation can be costly.
• Late pattern breaks: Near the apex, reliability diminishes.
• Market context: More bearish at tops, more bullish in strong trends.

• If volume contracts instead of expanding — no true megaphone behavior.
• If slope is nearly vertical — may be parabolic, not a broadening formation.
• If boundaries are poorly defined.