This Is One Overlooked Chart Pattern That Can Increase Your Profit| KOL Forex Analysis•Jay Tun

You have drawn your trendlines, support and resistance zones. You have scanned for the common chart patterns and none of them are present. You think that there is no opportunity and are about to move on to the next chart.

Hold on. Chances are, you have not considered this chart pattern. You are not the only one as this chart pattern is often overlooked - the broadening formation chart pattern.

The broadening formation chart pattern comprises of increasing volatility and 2 diverging lines. It usually forms after a significant increase or drop in prices.

Due to market participants disagreeing significantly on the prices, prices move in a very volatile fashion. This wide range of price area is like a battle zone between buyers and sellers.

In this battle zone, market participants are split in their evaluation of the currency pair. This results in heightened volatility, causing prices to range greatly in this chart pattern before the bulls or bears take full control. Hence, youd see 2 diverging trendlines which is the broadening formation chart pattern.

Generally, there are 6 types of broadening formation chart patterns.

They are:

#1 Ascending Right Angled Broadening Formation

#2 Descending Right Angled Broadening Formation

#3 Ascending Broadening Wedge

#4 Descending Broadening Wedge

#5 Broadening Top

#6 Broadening Bottom

However, did you know that the breakouts are unpredictable in broadening tops and bottoms？

The lines diverge and looks like a megaphone. They are neither ascending nor descending.

It is also not safe to just trade in the direction of the breakout for (5) and (6) because this battle zone of heightened volatility could be a false break that traps market participants. It can be frustrating to be caught in such a situation.

In this article, we cut through the fluff and zoom into the practical usage of broadening formation chart patterns.

While most chart patterns display converging prices, this displays diverging prices as shown in the examples below.

#1 Bullish Broadening Formation:

Characteristics:

· High volatility

· Diverging trendlines

· Decent volume on breakout important (to justify accumulation)

#2 Bearish Broadening Formation:

Characteristics:

· High volatility

· Diverging trendline

#1 Breakout Trade

· Watch for price to break the broadening formation line

· Enter your position according to the direction of the breakout

#2 Pullback Trade

· Watch for price to break the broadening formation line

· Wait for the price to pull back to the area near the line and enter your position

Broadening formations exist in times of high volatility. Many traders fear volatility and see it as a negative because they are under equipped. You are different as you know how to emerge successful by adding this chart pattern into your trading arsenal.

「About The Author」

An independent trader who seeks to educate through his own trading

experiences, Jay began his own trading journey at the age of 22.

He is a self-taught trader who has read more than 200 books on

trading and investment since college and created his trading

methodologies modelling after several successful veteran traders.Jay has

since amassed 10 years of experience trading different market

conditions with consistency. Of the many disciplines in trading, he

specializes in trading options, swing trades on equities,

currencies,futures and contract-for-difference (CFDs).

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