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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Chart Patterns: After the Buy
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Bulkowski's Broadening Formations, Right-Angled and Ascending

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 09/18/2017
22,331 63.01 0.3%
9,515 -31.61 -0.3%
739 -7.54 -1.0%
6,455 6.17 0.1%
2,504 3.64 0.1%
YTD
13.0%
5.2%
12.0%
19.9%
11.8%
Tom's Targets    Overview: 09/14/2017
22,450 or 21,500 by 10/01/2017
9,750 or 9,200 by 10/01/2017
775 or 730 by 10/01/2017
6,650 or 6,200 by 10/01/2017
2,600 or 2,425 by 10/01/2017

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 28 to 44.

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The right-angled and ascending broadening chart pattern is not one you should consider trading. Many other chart patterns perform much better. Downward breakouts have a large break even failure rate which should disqualify them from your trading arsenal. Upward breakouts have only a middling average rise, and that's if you trade them perfectly.

Right-angled and ascending broadeningformation
Right-Angled and Ascending Broadening Formation

 

Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 19 out of 23; 19 out of 21
Break even failure rate for up/down breakouts: 11%; 20%
Average rise/decline: 29%; 15%
Throwback/pullback rate: 47%; 65%
Percentage meeting price target for up/down breakouts: 68%; 32%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Broadening Formations, Right-Angled and Ascending: Identification Guidelines

CharacteristicDiscussion
Price trendCan be up (66% have a rising price trend) or down (34%) leading to the pattern.
ShapeA megaphone tilted up with the bottom horizontal.
TrendlinesThe bottom trendline is horizontal, the top one slopes upward.
TouchesAt least two peaks and two valleys should touch their respective trendline.
VolumeTrends upward 54% of the time and downward 46% of the time.
BreakoutDownward 66% of the time.
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Broadening Formations, Right-Angled and Ascending Trading Tips

Trading TacticExplanation
Measure ruleCompute the height from the highest peak (point A in the Measure Rule figure to the right) to the horizontal trendline (B) and multiply it by the above “percentage meeting price target.” Add the result to the highest peak (A, upward breakouts) or subtract it from the horizontal trendline (B, downward breakouts) to get the price target (C).
Intraformation tradeBuy at the horizontal trendline when price starts rising and sell or sell short once price turns at the top trendline.
Buy at 3rd touchWhen price touches the horizontal trendline for the third time and begins rising, buy.
Partial riseA partial rise works 74% of the time.
Partial declineA partial decline works 81% of the time.
Price trendThe best performing patterns are those with a short-term (less than three months) rise leading to the pattern.
Yearly high, lowDownward breakouts perform best when the breakout is within a third of the yearly low. For upward breakouts, performance is best when the breakout is within a third of the yearly high.
Volume trendA downward volume trend results in the best postbreakout performance.
Throwbacks and pullbacksThrowbacks and pullbacks hurt postbreakout performance.
Height, widthTall patterns perform better than short ones. Wide patterns (upward breakouts) and narrow patterns (downward breakouts) perform well.
Right-angled and ascending broadening formation measure rule
The Measure Rule
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Broadening Formations, Right-Angled and Ascending Example

Right-angled and ascending broadeningformation chart pattern example

The above figure shows an example of a right-angled and ascending broadening formation. A strong advance begins at point D and that leads to the right-angled and ascending broadening formation. Price bounces between two diverging trendlines before it closes outside the bottom trendline at A. This marks the downward breakout. Price recovers and busts the pattern at C when price moves above the top of the chart pattern. A throwback completes at B and price climbs thereafter.

-- Thomas Bulkowski

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Other Broadening Formations, Right-Angled and Ascending Examples

See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. I hit the CTRL key but I'm still not in control!