Right-Angled and Descending Broadening Formation

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

33,950 or 32,000 by 06/15/2023

14,600 or 13,350 by 06/15/2023

935 or 880 by 06/15/2023

13,600 or 12,200 by 06/15/2023

4,350 or 4,000 by 06/15/2023

Chart Pattern Indicator:

on 6/1/23

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

33,950 or 32,000 by 06/15/2023

14,600 or 13,350 by 06/15/2023

935 or 880 by 06/15/2023

13,600 or 12,200 by 06/15/2023

4,350 or 4,000 by 06/15/2023

Chart Pattern Indicator:

on 6/1/23

Bulkowski on the Right-Angled and Descending Broadening Formation

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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 and Descending Broadening Formation: Important Bull Market Results

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

Characteristic	Discussion
Price trend	Can be up or down leading to the pattern.
Shape	A megaphone tilted down with the top horizontal.
Trendlines	The top trendline is horizontal, the bottom one slopes downward.
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.
Breakout	Upward 64% of the time.

Right-Angled and Descending Broadening Formation: Trading Tips

Trading Tactic	Explanation	The Measure Rule
Measure rule	Compute 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 trade	Buy at the bottom trendline when price starts rising and sell or sell short once price turns at the horizontal trendline.
Buy at 3rd touch	When price touches the bottom trendline for the third time and begins rising, buy.
Partial rise	A partial rise works 47% of the time.
Partial decline	A partial decline works 75% of the time.
Price trend	The best performing patterns are those with an intermediate-term (3-6 months) price trend leading to the pattern.
Yearly middle	For downward breakouts, the lowest third of the yearly price range performs best. Upward breakouts do best in the middle third of the range.
Volume trend	A rising volume trend results in the best post breakout performance.

Broadening Formations, Right-Angled and Descending: Time Performance

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

Right-Angled and Descending Broadening Formation: Example

Bull Market Performance Over Decades
Breakout Direction	1990s	2000s	2010s
Up (average)	35%	53%	35%
Down (average)	16%	13%	17%

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.

Bulkowski on the Right-Angled and Descending Broadening Formation