Broadening Top Patterns Don’t Trade Them

Broadening Top is a reversal chart pattern that is part of technical analysis science in foreign exchange, stocks, commodities and other financial assets. Broadening top mostly happen at the top of an up trend, instead of the bottom of a down trend.

Broadening Top Causes

This chart pattern can happen because of the market uncertainty as the bull and the bear fight. It feels like the market is out of control.

From the example below, clearly we can see after its upward trend, the price is constantly making new high at point A, C, E and G. But the price is also making a new low point continuously at point B, D and F.

We don’t recommend for beginners to trade on this difficult chart pattern. On broadening top chart patterns, the price will move up and down unpredictably. You don’t have to trade a complex chart pattern to make a profit.

Is there any way to trade broadening top chart pattern?

If You look at one time frame only(the example above is a 1-hour chart) it is quite difficult to know where the prices will headed. Our suggestion is,  take a look at the bigger time frame such as 4 hour and daily time frame to get an idea of where the support and resistance level. Just relax…, wait for the price to breakout and make a new significant trend…, usually broadening top chart patterns has bearish implication.

Broadening Top Breakout

What a beautiful breakout isn’t it? From the red check sign we know that the price is breaking out the blue line as support and the candle closed below the blue(support) line . Don’t be rush.., some traders would enter short trade here at the candle close with their own forex system / strategy. If  you want a safe trade.., the best solution is wait for the bounce, on the above picture we clearly see that the price bounce from H to I point (80 pips), if there is any penetration on the H point you go open sell with a stop-loss slightly above the I point(about 10 Pips above the I point).  Finally the price went down 200 pips from H to J point and never touched your stop-loss.

Broadening Top Chart Patterns Conclusion

Do not trade broadening top chart patterns, because they are confusing and difficult patterns, wait for the breakout and the bounce, and certainly you’ll get your  profit.