Broadening Top

Table of Contents

The broadening pattern, also called the inverted triangle pattern, is a common pattern in technical analysis.  This pattern is defined as a series of higher highs and lower lows.  It takes at least 5 consecutive highs and lows in this pattern before we report it.

A broadening bottom alert means that the price touched the bottom of the pattern, then turned back up.  A broadening top alert means that the price touched the top of the pattern, then turned back down.

These are part of a series of alerts all based on local highs and lows.  Compared to most of our alerts, these alerts have longer terms and are based on more complicated chart patterns.  These patterns take longer to see, but they also last longer.

The analysis for these alerts starts with our standard volume confirmation.  This allows us to see which price trends are significant, and which prints should be filtered out.  You need more than just a price trend to define a high or a low.  You need significant volume below a high price, just to set a baseline.  Then you need significant volume near or at the high price to define the high price.  Finally you need significant volume below the price, again, to show that the trend has reversed itself and the price has turned around.  Lows are defined similarly.  After you have a series of these turning points, you can see the patterns described in these alerts.

The description of each alert lists the prices of the highs and lows that formed the pattern.  This includes our normal algorithm for removing stray prints.  This shows the most extreme prices where more than a trivial amount of volume occurs.  In some cases this price is an average of several prints, if no one print described the turning point adequately.

The description also includes the times when the pattern started and ended.  As a result of the smoothing and confirmation, the times are not as precise as the prices.  This is particularly obvious with NASDAQ stocks.  Often a significant turning point will occur between one day's close and the following trading day's open. The alert will attempt to find the exact turning point, but since trading gradually trails off in the evening, and gradually picks up in the morning, there may be no specific point in time.  The alert will just give its best estimate between the open and the close.  For NYSE stocks, the open is much more precise, So these alerts will often list the open as the exact starting time.

We report only the times when the stock was at the first high or low price and the when the stock was at the last high or low price.  The definition of these alerts requires the stock price to move in a certain direction before and after this to define a turning point.  We don't include this additional period in the time.

Each of these alerts can be filtered based on the volume inside the pattern.  Like the times, we only include volume between when the stock was at the first high or low and when the stock was at the last high or low.  We do not include the volume before and after these turning points.  More details on this filter are listed below.

Alert Info for Broadening Top [GBTOP]