Broadening Tops
3 min read
Core idea
A broadening top is a megaphone-shaped chart pattern that appears after a rising price trend. The upper trendline slopes up, the lower trendline slopes down, and the price swings get progressively wider over time. The only thing distinguishing a broadening top from a broadening bottom is the inbound price trend — uptrend for tops, downtrend for bottoms. Other names you'll encounter — expanding triangle, orthodox broadening top, five-point reversal — describe variants of the same shape, the last two simply requiring exactly five turning points (three minor highs, two minor lows or vice versa).
Expanding volatility, not direction
The pattern is a study in rising volatility without resolution. Each new high is met by more aggressive sellers; each new low is met by more aggressive buyers. Volume tends to climb through the pattern, often mimicking the price swings. The struggle resolves only when one side finally overwhelms the other — and either direction is possible, with no strong statistical preference.
Five touches is the minimum
A well-formed broadening top requires at least five trendline touches — two on one line, three on the other, at true minor highs and lows. Trendline cuts that don't sit on a turning point (common at the pattern's start or end) don't count. Fewer than five touches and you're likely staring at noise.
Why it matters
Broadening tops are dangerous to trade because the breakout price is ambiguous. Most chart patterns have a single decisive breakout level; broadening tops have a moving upper trendline whose value depends on how far you extend it. Bulkowski's convention is to treat the highest peak in the pattern as the breakout price, but this is partly a measurement decision and partly a trader's choice. The takeaway: position sizing and stops matter more here than in tighter patterns, because the entry signal itself carries measurement noise.
Key takeaways
Mental model
Practical application
Trading rules of thumb
-
Don't anticipate direction. Unlike right-angled broadenings, broadening tops give no reliable directional bias. Wait for the breakout — a close beyond the highest peak (up) or lowest trough (down).
-
Use the highest peak as the breakout price. This is a measurement convention, not a magic level. Stops should be set relative to the opposite trendline.
-
Beware the 5% failure. A breakout that travels 5% or less before reversing is the dominant failure mode here. A tight initial stop and willingness to reverse the trade saves more than it costs.
-
Plan for horizontal drift. Many broadening tops grind sideways for half a year or more before resolving. If your trading horizon is short, this pattern's slow resolution will eat your patience and your capital.
-
Use volume as a sanity check. The textbook expectation is rising volume through the pattern. Falling volume on a breakout is a warning that the move may not be sustained.
Measure rule
Example
Imagine a biotech stock running from $80 to $120 over three months, then forming a megaphone over the next four months: peaks at $122, $128, $134; troughs at $115, $108, $98. Total: three peak touches + three trough touches = six. Pattern qualifies.
Volume rises through the pattern, spiking on each new high and new low. Then price stalls for nine weeks between $110 and $130 — no new high, no new low. Many traders bail out of boredom; the patient remain.
In week ten, price breaks above $134 on a volume surge. The measure-rule target: $134 + ($134 − $98) = $170. A trader buys on the breakout with a stop just below the lower trendline at $96 (a generous stop, but the only one consistent with the pattern). Even if the trade hits the target, the reward-to-risk is roughly 1:1 — illustrating why broadening tops are middle-of-the-pack performers despite the dramatic appearance.
Related lessons
Related concepts
- Chart Patternlinked concept
- Breakoutlinked concept
- Reversal Patternslinked concept
- Five-Point Reversallinked concept
- Expanding Volatilitylinked concept