As of 10/15/2020
  Indus: 28,494 -19.80 -0.1%  
  Trans: 11,989 +101.34 +0.9%  
  Utils: 875 +0.03 +0.0%  
  Nasdaq: 11,714 -54.86 -0.5%  
  S&P 500: 3,483 -5.33 -0.2%  
YTD
-0.2%  
 +10.0%  
-0.4%  
 +30.6%  
 +7.8%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 9/25/20
As of 10/15/2020
  Indus: 28,494 -19.80 -0.1%  
  Trans: 11,989 +101.34 +0.9%  
  Utils: 875 +0.03 +0.0%  
  Nasdaq: 11,714 -54.86 -0.5%  
  S&P 500: 3,483 -5.33 -0.2%  
YTD
-0.2%  
 +10.0%  
-0.4%  
 +30.6%  
 +7.8%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 9/25/20

Bulkowski on Descending Broadening Wedges

 

Statistics updated: 8/26/2020.

For more information on this pattern, read Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns., pictured on the right, pages 98 to 114.

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-- Tom Bulkowski

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Performance of descending broadening wedges is near the bottom of the list. You'll find found most often with upward breakouts in a bull market. Downward breakouts are rare. As with other broadening patterns, partial rises and declines predict the breakout direction. Partial declines work particularly well, but are difficult to distinguish from the pauses that normally occur as price bounces from trendline to trendline.

Descending broadening wedge chart pattern appears
Descending Broadening Wedge

Descending Broadening Wedges: Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 27 out of 39/29 out of 36
Break even failure rate for up/down breakouts: 18%/35%
Average rise/decline: 39%/13%
Throwback/pullback rate: 62%/64%
Percentage meeting price target for up/down breakouts: 83%/32%

The above numbers are based on 757 perfect trades. See the glossary for definitions.

Descending Broadening Wedge: Identification Guidelines

CharacteristicDiscussion
Price trendCan be up or down leading to the pattern.
ShapeA megaphone tilted down.
TrendlinesBoth trendlines slope downward.
TouchesFor proper identification, look for at least five trendline touches (three or more touches of one trendline, two or more of the other) at minor highs or lows. Price cutting through a trendline doesn't count as a touch (that happens most at the start and breakout of the pattern).
Volume trendTrends upward.

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Descending Broadening Wedge: Trading Tips

Consult the associated figure on the right.

Trading TacticExplanation Adam & Adam double top measure rule
The Measure Rule
Measure ruleFor upward breakouts, use the highest peak (A) in the chart pattern as the target. For downward breakouts, compute the difference between the highest peak (A) and the lowest valley B in the chart pattern to get the height. Multiply the height by the above "percentage meeting price target" and then subtract it from the lowest valley (B) to get a price target.
Intraformation tradeShort at the top (1) when price heads down. Cover at the bottom trendline (2).
Buy at 3rd touchWhen price touches the bottom trendline for the third time (see point 3) and begins rising, buy. Price may breakout on the following trip across the chart pattern.
Short at the topWhen price touches the top trendline (1) and begins falling, sell or sell short.
Partial riseA partial rise works just 36% of the time, so don't rely on it.
Partial declineA partial decline works 79% of the time
Price trendFor upward breakouts, the best performing patterns are those with a long-term (more than six months) rise leading to the pattern.
Yearly lowFor both breakout directions, the best performing are those with breakouts within a third of the yearly low, but the results are close.
Volume trendDownward breakouts favor a rising volume trend and upward breakouts show better performance when volume trends downward throughout the pattern.
BreakoutThe breakout direction is upward 72% of the time.
Throwbacks and pullbacksPullbacks hurt performance. Throwbacks see no performance difference.

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Descending Broadening Wedge: Example

Descending broadening wedge chart pattern example

The above figure shows an example of a descending broadening wedge chart pattern. The formation begins at point A. This long and loose descending broadening wedge is typical for this chart pattern type. A partial decline forms at B, and that might be the only redeeming feature of this chart pattern. However, price breaks out upward and reaches the target within a week of the breakout. The target appears as the dashed green line on the chart.

-- Thomas Bulkowski

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Descending Broadening Wedge: Other 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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