Broadening Formation
A broadening formation, or megaphone, is a chart pattern of successively higher highs and lower lows, so the price range widens over time. It signals a volatile tug-of-war between buyers and sellers, and its breakouts are notoriously unreliable.
Most patterns narrow as the market makes up its mind. The broadening formation does the opposite: each swing goes further than the last, up and down, until the chart looks like a megaphone. It usually appears in nervous, emotional markets. This entry explains how to recognise it, why it is hard to trade and how traders approach it.
- Category
- Price Action
- Reading time
- 3 min
- Also called
- Broadening top, Broadening bottom, Megaphone pattern
- Updated
The broadening formation in plain words
A broadening top shows successively higher peaks and lower valleys; trend lines across the highs and lows form a megaphone or reverse triangle.1
It reflects volatile disagreement between bulls bidding prices up and bears selling them down.1
Broadening tops can take many months to form.2
How to identify a broadening formation, step by step
Look for widening swings
Each high above the last, each low below. See Swing High and Swing Low.
Draw two diverging lines
One across the highs, one across the lows. See Trendline.
Count the touches
At least five in total.
Note the volatility
Expanding ranges mean rising risk. See Volatility.
Wait for a break
A decisive move outside the lines.
Expect a retest
Price often falls back into the pattern.
Worked examples
Example 1 — The widening range
Range quadrupledHighs at $50, $53, $57; lows at $46, $43, $40.
| First swing range | $50 − $46 = $4 |
| Last swing range | $57 − $40 = $17 |
Consecutive higher highs and lower lows create the expanding megaphone shape.1
Example 2 — A failed breakout
−$7Price breaks above the upper line at $59, then drops back to $52 inside the pattern.
| Breakout | $59 |
| Back inside | $52 |
| Loss if bought at $59 | −$7 a share |
Price pulls back into the pattern's range more than 60% of the time after a breakout.1
Example 3 — Five touches
Pattern qualifiesThree touches on the upper line and two on the lower.
| Total touches | 3 + 2 = 5 |
| Valid pattern? | Yes — meets the minimum |
A broadening top should have at least five touches in total.1
Broadening formation vs symmetrical triangle
| Aspect | Broadening | Symmetrical triangle |
|---|---|---|
| Lines | Diverge | Converge |
| Volatility | Rising | Falling |
| Mood | Emotional, uncertain | Calm, coiling |
| Breakout reliability | Poor | Better. See Triangle Pattern |
How traders handle broadening formations
Risk warning
A sign to reduce position size. See Position Sizing.
Swing trading the lines
Fading the outer lines with tight stops. See Swing Trading.
Late-cycle tops
Often linked with nervous market tops.
Breakout with confirmation
Waiting for a retest before acting. See Breakout.
Advantages and disadvantages
Advantages
- Highlights rising volatility early.
- Clear swing points to trade against.
- Warns of unstable sentiment.
Disadvantages
- Breakouts often fail.
- Wide swings mean wide stops.
- Direction after the pattern is hard to judge.
Going deeper
Read as far as you need. Each level builds on the one before it.
Bullish or bearish?
Beginner
Many investors treat broadening tops as bearish, but their historical record as a directional signal is poor.1
Expect wide swings
Intermediate
Reversal or not
Advanced
Broadening patterns are often listed among reversal patterns, but any pattern's role depends on the price action, volume and indicators around it.2
Common mistakes
Trusting the first breakout
Most pull back inside.
Normal position size
Rising volatility needs smaller size.
Too few touches
Two highs and two lows aren't enough.
Ignoring the market mood
These patterns thrive on uncertainty.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- A broadening formation has higher highs and lower lows.
- It looks like a megaphone.
- It signals rising volatility and disagreement.
- Breakouts frequently fail.
- Trade it with smaller size and wider stops.
Frequently asked questions
Is a megaphone pattern bullish?
How many touches are needed?
Where do broadening formations appear?
Further learning
- Triangle Pattern
The converging opposite.
- Volatility
What the pattern reflects.
- Breakout
Why breakouts here are tricky.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- StockCharts ChartSchool. Broadening Top or Megaphone Top (opens in a new tab) Checked .
- StockCharts ChartSchool. Introduction to Chart Patterns (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.