Broadening Formation, Right-Angled and Ascending

As of 03/24/2023

Indus: 32,238 +132.28 +0.4%

Trans: 13,707 +18.91 +0.1%

Utils: 911 +28.13 +3.2%

Nasdaq: 11,824 +36.56 +0.3%

S&P 500: 3,971 +22.27 +0.6%

YTD

-2.7%

+2.3%

-5.9%

+13.0%

+3.4%

Targets Overview: 02/14/2023

30,900 or 33,100 by 04/01/2023

15,350 or 13,400 by 04/01/2023

940 or 860 by 04/01/2023

12,450 or 11,000 by 04/15/2023

4,100 or 3,800 by 04/01/2023

Chart Pattern Indicator:

on 3/22/23

As of 03/24/2023

Indus: 32,238 +132.28 +0.4%

Trans: 13,707 +18.91 +0.1%

Utils: 911 +28.13 +3.2%

Nasdaq: 11,824 +36.56 +0.3%

S&P 500: 3,971 +22.27 +0.6%

YTD

-2.7%

+2.3%

-5.9%

+13.0%

+3.4%

Targets Overview: 02/14/2023

30,900 or 33,100 by 04/01/2023

15,350 or 13,400 by 04/01/2023

940 or 860 by 04/01/2023

12,450 or 11,000 by 04/15/2023

4,100 or 3,800 by 04/01/2023

Chart Pattern Indicator:

on 3/22/23

Bulkowski on Broadening Formations, Right-Angled and Ascending

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The right-angled and ascending broadening chart pattern is a mid-list performer in bull markets. Downward breakouts perform slightly worse than upward breakouts, based on the performance rank.

Important Bull Market Results

The above numbers are based on 551 samples for upward breakouts and 455 for downward breakouts. See the glossary for definitions.

Broadening Formations, Right-Angled and Ascending: Identification Guidelines

Characteristic	Discussion
Price trend	Can be up (74% have a rising price trend) leading to the pattern.
Shape	A megaphone tilted up with the bottom horizontal.
Trendlines	The bottom trendline is horizontal, the top one slopes upward.
Touches	At 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.
Volume	Trends upward 62% to 63% of the time.
Breakout	Upward 55% of the time.

Broadening Formations, Right-Angled and Ascending: Trading Tips

Trading Tactic	Explanation	The Measure Rule
Measure rule	Compute 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 trade	Buy at the horizontal trendline when price starts rising and sell or sell short once price turns at the top trendline.
Buy at 3rd touch	When price touches the horizontal trendline for the third time and begins rising, buy.
Partial rise	A partial rise works 61% of the time.
Partial decline	A partial decline works 80% of the time.
Price trend	The best performing patterns are those with a short-term (less than three months) rise leading to the pattern.
Yearly high, low	Downward and upward breakouts perform best when the breakout is within a third of the yearly low.
Volume trend	A downward volume trend results in the best postbreakout performance.
Throwbacks and pullbacks	Throwbacks and pullbacks hurt postbreakout performance.
Height, width	Tall patterns perform better than short ones. Wide patterns (both breakout directions) perform well.

Broadening Formations, Right-Angled and Ascending: Time Performance

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

Downward breakouts outperformed in the 1990s but didn't vary much among the decades.

Broadening Formations, Right-Angled and Ascending: Example

Bull Market Performance Over Decades
Breakout Direction	1990s	2000s	2010s
Up (average)	41%	50%	36%
Down (average)	16%	13%	14%

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.