Broadening Formation, Right-Angled and Ascending

Core idea

The right-angled and ascending broadening formation has a horizontal lower trendline (a base of buyers defending a fixed price) and an up-sloping upper trendline (each rally peak higher than the last). The resulting shape is a sideways megaphone with a flat floor and a tilted ceiling. The name is counterintuitive: "ascending" refers to the top trendline, not the breakout direction — breakouts can resolve either way and do so almost at random, with a slight bias toward upward.

The pattern's structural story is conviction at the base. As long as the horizontal floor holds, perceived value brings buyers in. Selling pressure cuts each rally shorter than the last produces — wait, no, longer than the last (the top slopes up). Eventually one side wins: either buyers consume all the supply and break out, or the floor cracks and a downward breakout begins.

Why volume rises

Unusually, volume trends upward through the formation. Widening price swings pull in more participants on each oscillation. This is opposite the typical pattern, where shrinking range correlates with shrinking volume.

Why it matters

The most valuable feature of this pattern is the support/resistance afterlife of its trendlines. Bulkowski shows weekly-scale ascending broadening patterns whose extended horizontal base repels declines two years later, and whose extended up-sloping top repels rallies almost a year out. If you own a stock breaking out to new highs, finding an earlier ascending broadening formation on the weekly chart and extending its top trendline gives you a credible price ceiling for selling.

The pattern also illustrates a recurring trade hazard: 5% failures are common. Price breaks out, moves no more than 5%, then reverses through the formation and breaks out the opposite way. Without a stop on the opposite trendline, the round trip turns a planned scalp into a structural loss.

Key takeaways

Mental model

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Practical application

Trading the breakout

Using the trendlines as future support/resistance

Example

A retail stock spends six months between $28 and $32 after a sharp rally. The lower trendline is dead-flat at $28 (four touches). The upper trendline runs from $32 at month one to $36 at month six, touching three minor highs along the way. That's seven touches — pattern established.

In month seven, price leaves $28 and rallies to $34 — short of the up-sloping top at $36.50. Selling resumes and price curls back toward $28. That's a partial rise. An immediate downward breakout is likely.

You short at $30.50 with a stop at $36.50 (top trendline). Three days later the stock closes at $27.50, breaking the horizontal base. Target: pattern height (~$8) subtracted from $28 = $20. Price falls to $24, retraces to $28 (pullback) within nine days, then resumes lower to $22 before bottoming.

Now project the extended trendlines forward. The up-sloping top at month twelve sits at $40. Two months later, the stock recovers to $40.20 — and stalls there for three weeks. The extended trendline did its work nine months after the original pattern resolved.

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