Bulkowski's Broadening Formations, Right-Angled and Ascending

Written by and copyright © 2005-2013 by Thomas N. Bulkowski. All rights reserved.

For more information on this pattern, read Encyclopedia of Chart Patterns, Second Edition, pictured on the right, pages 28 to 44. That chapter gives a complete review of the chart pattern, including tour, identification guidelines, focus on failures, performance statistics, trading tactics, and sample trade. Below is just a sliver of the information contained in the book.

The right-angled and ascending broadening chart pattern is not one you should consider trading. Many other chart patterns perform much better. Downward breakouts have a large break even failure rate which should disqualify them from your trading arsenal. Upward breakouts have only a middling average rise, and that's if you trade them perfectly.

Important Results Identification Guidelines Trading Tips Example Other Examples See Also

Right-Angled and Ascending Broadening Formation

Broadening Formations, Right-Angled and Ascending: Identification Guidelines

Broadening Formations, Right-Angled and Ascending Trading Tips

Trading Tactic Explanation 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 74% of the time. Partial decline A partial decline works 81% 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 breakouts perform best when the breakout is within a third of the yearly low. For upward breakouts, performance is best when the breakout is within a third of the yearly high. 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 (upward breakouts) and narrow patterns (downward breakouts) perform well.

The Measure Rule

Broadening Formations, Right-Angled and Ascending Example

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.

-- Thomas Bulkowski

Other Broadening Formations, Right-Angled and Ascending Examples

• Broadening formation NYSE Composite, Oct 2009-May 2010.
• Broadening formation in the utilities, July 2009.
• Same as above but shown in December 2009.

Copyright © 2005-2013 by Thomas N. Bulkowski. All rights reserved. I hit the CTRL key but I'm still not in control!