Broadening top (a.k.a. a megaphone pattern) is

technical analysis In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...

chart pattern A chart pattern or price pattern is a pattern within a chart when prices are graphed. In stock and commodity markets trading, chart pattern studies play a large role during technical analysis. When data is plotted there is usually a pattern which ...

describing trends of stocks, commodities, currencies, and other assets. Broadening Top formation appears much more frequently at tops than at bottoms. Its formation usually has ''

bearish Market sentiment, also known as investor attention, is the general prevailing attitude of investors as to anticipated price development in a market. This attitude is the accumulation of a variety of fundamental and technical factors, including ...

'' implications. It is a common saying that ''smart money'' is out of market in such formation and market is out of control. In its formation, most of the selling is completed in the early stage by big players and the participation is from general public in the later stage.

Price and volume

Price keeps on swinging unpredictably and one cannot be sure where the next swing will end. Regarding the ''shares volume'', it is very irregular and leaves no clue to the direction of the next move.

How broadening top is formed

In the broadening top formation ''five minor reversals'' are followed by a substantial decline. In the figure above, price of the share reverses five times, reversal point ''d'' is made at a lower point than reversal point ''b'' and reversal point ''c'' and ''e'' occur successively higher than reversal point ''a''. One cannot be sure of the

trend A fad or trend is any form of collective behavior that develops within a culture, a generation or social group in which a group of people enthusiastically follow an impulse for a short period. Fads are objects or behaviors that achieve shor ...

unless price breaks down the lower of the two points ''(b & d)'' and keeps on falling. In the figure below, ''Broading Top is confirmed''.

Other chart patterns

Candlestick pattern In financial technical analysis, a candlestick pattern is a movement in prices shown graphically on a candlestick chart that some believe can predict a particular market movement. The recognition of the pattern is subjective and programs that are us ...

Double top and double bottom Double top and double bottom are reversal chart patterns observed in the technical analysis of financial trading markets of stocks, commodities, currencies, and other assets. Double top The double top is a frequent price formation at the end ...

* Gap (chart pattern) * Head and shoulders top and bottom * Island reversal * Triple top and triple bottom * Wedge pattern

References

{{technical analysis Chart patterns