As of 12/04/2020
  Indus: 30,218 +248.74 +0.8%  
  Trans: 12,742 +155.26 +1.2%  
  Utils: 856 -10.76 -1.2%  
  Nasdaq: 12,464 +87.05 +0.7%  
  S&P 500: 3,699 +32.40 +0.9%  
YTD
 +5.9%  
 +16.9%  
-2.6%  
 +38.9%  
 +14.5%  
  Targets    Overview: 11/30/2020  
  Up arrow30,700 or 28,250 by 12/15/2020
  Up arrow13,500 or 11,700 by 12/15/2020
  Down arrow830 or 925 by 12/15/2020
  Up arrow12,500 or 11,400 by 12/15/2020
  Up arrow3,750 or 3,400 by 12/15/2020
CPI (updated daily): Arrows on 11/2/20
As of 12/04/2020
  Indus: 30,218 +248.74 +0.8%  
  Trans: 12,742 +155.26 +1.2%  
  Utils: 856 -10.76 -1.2%  
  Nasdaq: 12,464 +87.05 +0.7%  
  S&P 500: 3,699 +32.40 +0.9%  
YTD
 +5.9%  
 +16.9%  
-2.6%  
 +38.9%  
 +14.5%  
  Targets    Overview: 11/30/2020  
  Up arrow30,700 or 28,250 by 12/15/2020
  Up arrow13,500 or 11,700 by 12/15/2020
  Down arrow830 or 925 by 12/15/2020
  Up arrow12,500 or 11,400 by 12/15/2020
  Up arrow3,750 or 3,400 by 12/15/2020
CPI (updated daily): Arrows on 11/2/20

Bulkowski on the Right-Angled and Descending Broadening Formation

 

For more information on this pattern, read Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns ., pictured on the right, pages 45 to 62.

Updated with new statistics on 8/25/2020.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

The right-angled and descending broadening chart pattern about ties with the performance of right-angled ascending broadening pattern in a bull market (43% average rise). The break even failure rate is slightly above average, though, at 21%. This is not a chart pattern you'll want to curl up with at night and dream about.

Right-angled broadening formation, descending
Right-Angled and Descending Broadening Formation

Right-Angled and Descending Broadening Formation: Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 19 out of 39/18 out of 36
Break even failure rate for up/down breakouts: 21%/23%
Average rise/decline: 43%/15%
Throwback/pullback rate: 64%/69%
Percentage meeting price target for up/down breakouts: 65%; 51%

The above numbers are based on 601 samples for upward breakouts and 335 for downward breakouts. See the glossary for definitions.

 

Right-Angled and Descending Broadening Formation: Identification Guidelines

CharacteristicDiscussion
Price trendCan be up or down leading to the pattern.
ShapeA megaphone tilted down with the top horizontal.
TrendlinesThe top trendline is horizontal, the bottom one slopes downward.
TouchesAt least five touches total, three peaks or three valleys should touch the associated trend line with two or more touches of the other trendline. Ideally, the second of three touches will touch (instead of coming 'close' to) the trendline.
BreakoutUpward 64% of the time.

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Right-Angled and Descending Broadening Formation: Trading Tips

Trading TacticExplanation Right-angled and descending broadening formation measure rule
The Measure Rule
Measure ruleCompute the height from the horizontal trendline (B in the Measure Rule figure to the right) to the lowest valley (A) and multiply it by the above 'percentage meeting price target.' Add the result to the horizontal trendline (B, upward breakouts) or subtract it from the lowest valley (A, downward breakouts) to get the price target (C).
Intraformation tradeBuy at the bottom trendline when price starts rising and sell or sell short once price turns at the horizontal trendline.
Buy at 3rd touchWhen price touches the bottom trendline for the third time and begins rising, buy.
Partial riseA partial rise works 47% of the time.
Partial declineA partial decline works 75% of the time.
Price trendThe best performing patterns are those with an intermediate-term (3-6 months) price trend leading to the pattern.
Yearly middleFor downward breakouts, the lowest third of the yearly price range performs best. Upward breakouts do best in the middle third of the range.
Volume trendA rising volume trend results in the best post breakout performance.

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Broadening Formations, Right-Angled and Descending: Time Performance

 

Bull Market Performance Over Decades
Breakout Direction1990s2000s2010s
Up (average)35%53%35%
Down (average)16%13%17%

The table above shows the performance of right-angled descending broadening top chart patterns in bull markets over the last three decades.

Upward breakouts did best in the 2000s but the other two decades held steady.

Downward breakouts did worst in the 2000s and outperformed in the 2010s.

 

Right-Angled and Descending Broadening Formation: Example

Right-angled and descending broadening formation example

The above figure shows an example of a right-angled and descending broadening formation chart pattern. Price begins a decline at A that leads to the chart pattern. Price bounces between a horizontal trendline on the top and a down-sloping one along the bottom of the chart pattern. A partial decline at B signals an impending upward breakout at C. After the breakout, price makes a strong move upward.

-- Thomas Bulkowski

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Other Right-Angled and Descending Broadening Formation: Examples

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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