Broadening Bottoms

Core idea

A broadening bottom is a megaphone-shaped pattern that appears after a downtrend. Two diverging trendlines — an up-sloping top and a down-sloping bottom — frame price as it swings between progressively higher highs and lower lows. The classification is arbitrary: the only thing distinguishing a broadening bottom from a broadening top is that price was trending down into the formation. Bulkowski separates them in case they behave differently; the statistics show they're similar but not identical.

Broadening bottoms are mid-list performers. Upward breakouts are favored (helped by bull-market tailwinds), and the average rise is around 45% — though that's a perfect-trade number, and downward breakouts in bull markets struggle to drop 15%.

What makes it a broadening, not a channel or wedge

A valid broadening bottom requires two diverging trendlines (neither horizontal) and at least five total trendline touches — three on one line and two on the other. Touches must occur at true minor highs or lows; price slicing through a line at the start or end doesn't count. If the interior of the pattern has a large empty "white hole," you've cut off a turn — redraw it as a down-sloping channel instead.

Why it matters

The broadening bottom is treacherous to trade because the breakout point is genuinely ambiguous. With diverging trendlines, price can hug the top trendline upward for weeks without ever closing above it. Bulkowski's workaround — backtrack to the prior minor high and draw a horizontal line forward in time — converts the ambiguity into a usable trigger. Without that rule, you either enter late (after price has already moved 10–20%) or skip a real pattern altogether.

The more useful trading signal is the partial decline: when price leaves the top trendline, fails to reach the bottom trendline, and curls back upward. It almost always foreshadows an immediate upward breakout — letting you enter before confirmation, with the failed low as your stop.

Key takeaways

Mental model

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Practical application

Establishing the pattern

Trading the partial-decline signal

Example

Imagine a biotech stock that fell from $48 to $24 over four months on disappointing trial data. The stock then enters a megaphone phase: bouncing $24 → $28 → $22 → $30 → $20 → $32 → $19. You count seven touches (three on the up-sloping top, four on the down-sloping bottom) — pattern qualifies.

In week ten, price rises from $19 to $26 and stalls. The lower trendline projects to $17 at that bar; the upper trendline projects to $33. Selling resumes briefly, but price bottoms at $24.50 — well above the lower trendline — and curls back up. That's the partial decline.

You enter long at $25 with a stop at $24.25. Three days later the stock closes at $34, busting the upper trendline (which by now projects to $34.50). Target via measure rule: pattern height (~$13) added to the breakout point at ~$34 = $47. The stock takes nine months to reach $43 before stalling at prior resistance.

If instead the partial move had been a partial rise — leaving the bottom at $19 and topping at $28 short of the projected $32 — you'd reverse the trade: short on the curl-back toward the lower trendline, stop above the failed high.

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