Broadening_Formations - both trendlines to determine which...

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Broadening Formations 05/22/00 05:43:09 PM PST by Jayanthi Gopalakrishnan Broadening formations, also known as broadening triangles, are defined as a series of higher highs combined with lower lows. Trading volume tends to expand during the widening phase, and signal a breakdown of the current pattern. Security: N/A Position: N/A The broadening formation can be either a consolidation (correction period), or a complete reversal. You will not come across broadening formations often, but when you do they signify important support and resistance levels. The upper trendline acts as a resistance level while the lower trendline acts as a support level. Generally when you see this formation starting, extend
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Unformatted text preview: both trendlines to determine which way prices will move. A break in any of the trendlines would indicate an entry point for a trade. The simplest method to utilize broading formations is to go long when prices turn away from the support line. Always place a stop 1/8 to 1/4 point above this line. You can go one step further by placing a price target for exiting your position. Take the difference between the high and low point and add this difference to either the high or low. The DJIA weekly chart showing a broadening top formation...
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This note was uploaded on 04/14/2010 for the course FINANCE fnce 305 taught by Professor Proftujun during the Spring '10 term at Singapore Management.

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