As of 06/06/2023
  Indus: 33,573 +10.42 +0.0%  
  Trans: 14,061 +71.28 +0.5%  
  Utils: 902 -1.73 -0.2%  
  Nasdaq: 13,276 +46.99 +0.4%  
  S&P 500: 4,284 +10.06 +0.2%  
YTD
 +1.3%  
 +5.0%  
-6.7%  
 +26.8%  
 +11.6%  
  Targets    Overview: 05/30/2023  
  Up arrow33,950 or 32,000 by 06/15/2023
  Up arrow14,600 or 13,350 by 06/15/2023
  Up arrow935 or 880 by 06/15/2023
  Up arrow13,600 or 12,200 by 06/15/2023
  Up arrow4,350 or 4,000 by 06/15/2023
As of 06/06/2023
  Indus: 33,573 +10.42 +0.0%  
  Trans: 14,061 +71.28 +0.5%  
  Utils: 902 -1.73 -0.2%  
  Nasdaq: 13,276 +46.99 +0.4%  
  S&P 500: 4,284 +10.06 +0.2%  
YTD
 +1.3%  
 +5.0%  
-6.7%  
 +26.8%  
 +11.6%  
  Targets    Overview: 05/30/2023  
  Up arrow33,950 or 32,000 by 06/15/2023
  Up arrow14,600 or 13,350 by 06/15/2023
  Up arrow935 or 880 by 06/15/2023
  Up arrow13,600 or 12,200 by 06/15/2023
  Up arrow4,350 or 4,000 by 06/15/2023

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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See Also

 

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My novels:  Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of Chart Patterns 3rd Edition book

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