What a broadening formation is
A broadening formation is a chart pattern where each swing high is higher than the previous high and each swing low is lower than the previous low. The price range widens over time, so the shape looks like a megaphone. That is why it is also called a megaphone pattern.
A swing high is a peak with lower prices on both sides. A swing low is a trough with higher prices on both sides. In a broadening formation, a rising line connects the highs and a falling line connects the lows, and the lines move apart.
The pattern is the opposite of a symmetrical triangle, where the lines converge. It usually reflects disagreement and growing volatility, not a calm market.
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How to draw the structure
The sketch below is a drawn example, not a live chart. Letters mark swing points.
- Upper line: drawn through highs A, B and D. Each high is above the one before it.
- Lower line: drawn through lows C and E. Each low is below the one before it.
- Draw the lines through the swing points. Use either candle bodies or wicks, and keep that choice for every touch.
Identification rules
| Rule | What to check |
|---|---|
| Higher highs | Each new peak is above the previous peak |
| Lower lows | Each new trough is below the previous trough |
| Diverging lines | The upper line rises, the lower line falls |
| Several touches | Each line is touched more than once by a clear swing, not by random noise |
| Context | Note the trend before the pattern. The same shape means different things at a top and inside a range |
A broadening wedge pattern is a variant where both lines slope in the same direction but still move apart. An ascending broadening wedge has both lines rising, and a descending broadening wedge has both lines falling. The identification logic is the same: the range widens.
The measured-move convention
The measured move is a convention traders use to mark a reference level. It is not a forecast.
- Measure the vertical height of the pattern at its widest point, from the upper line down to the lower line.
- Take the point where price closes outside a line.
- Project the same height from that point in the direction of the close.
The projected level is a reference for planning, for example where to review a position. Price may stop short of it, pass it or reverse before it. You can test position size against your stop distance with the tools on the calculators page.
Invalidation
Before relying on any reading of the pattern, decide what would prove it wrong:
- After a close outside a line, price returns inside the formation and closes there.
- A new swing breaks the structure, for example a high that does not exceed the previous high, so the range stops widening.
- The lines have to be redrawn so often that they no longer describe the swings.
Placing a stop beyond the opposite side of the recent swing is a common way to define this level in advance. Our risk management guide covers this in detail.
Common false breakouts and failure modes
The pattern is built from overshoots, so false breakouts are frequent:
- Wick spikes: price pierces a line intraday and closes back inside. Waiting for a close reduces this problem but does not remove it.
- Expansion continues: what looks like a breakout is just the next wider swing of the same megaphone.
- News moves: data releases can push price through a line and back within a short time.
- Low timeframe noise: on small timeframes, swings that look like the pattern are often random.
- Hindsight drawing: lines fitted after the move always look clean. Draw them in real time.
Leveraged forex and CFD trading can lose money fast, and a widening range means wider stops and larger swings against you. For related shapes, see chart patterns, the diamond pattern and technical analysis.
Frequent questions
Is a broadening formation bullish or bearish?
On its own, it is neither. It shows widening volatility. Traders read it together with the prior trend and the direction of a confirmed close outside the lines.
Is the megaphone pattern the same as a broadening wedge?
They are close relatives. In a megaphone, the lines slope in opposite directions. In a broadening wedge, both lines slope the same way while still diverging.
Does the measured move tell me where price will go?
No. It is a convention for marking a reference level. Markets often ignore it.
How do I practise broadening pattern trading without risking money?
You can mark patterns on historical charts and track how they ended. A demo account lets you practise execution without real funds.