A broadening formation is a chart pattern in which price action expands over time, creating higher highs and lower lows that form a megaphone or inverse triangle shape. It indicates increasing volatility and growing disagreement between buyers and sellers about value. Broadening formations are typically seen during periods of market uncertainty and can be difficult to trade due to their erratic price swings. They often appear near market tops and may signal an impending trend reversal.
Example
“The stock formed a broadening formation on the daily chart with each successive swing growing wider, reflecting heightened uncertainty ahead of earnings.”