Broadening Top
Encyclopedia
Broadening top is technical analysis chart pattern describing trends of stocks, commodities, currencies, and other assets.
In its formation, most of the selling is completed in the early stage by big players and the participation is from general public in the later stage.
Regarding the shares volume, it is very irregular and leaves no clue to the direction of the next move.
In the figure above, price of the share
reverses five times, reversal point d is made at a lower point than reversal point b and reversal point c and e occur successively higher than reversal point a.
One can't be sure of the trend
unless price breaks down the lower of the two points (b & d) and keeps on falling. In the figure below, Broading Top is confirmed.
Point of Formation
Broadening Top formation appears much more frequently at tops than at bottoms. It is a difficult formation to trade in. Its formation usually has bearish implications.Role of Big Players
It is a common saying that smart money is out of market in such formation and market is out of control.In its formation, most of the selling is completed in the early stage by big players and the participation is from general public in the later stage.
Price & Volume
Price keeps on swinging unpredictably and one can't be sure where the next swing will end.Regarding the shares volume, it is very irregular and leaves no clue to the direction of the next move.
How Broadening Top is formed
In the broadening top formation five minor reversals are followed by a substantial decline.In the figure above, price of the share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
reverses five times, reversal point d is made at a lower point than reversal point b and reversal point c and e occur successively higher than reversal point a.
One can't be sure of the trend
Market trend
A market trend is a putative tendency of a financial market to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary for short time frames...
unless price breaks down the lower of the two points (b & d) and keeps on falling. In the figure below, Broading Top is confirmed.
See also
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- Wedge Formations