A broadening formation is a very good example of a consolidation pattern. In addition, it is a very good tool for making predictions for a reversal in the ongoing trend.It should be noted that broadening formation in a uptrend indicates a upcoming reversal in the price action. Therefore, investors must not confuse for a continuation of the ongoing trend.
The broadening formation is often formed when there are numerous lows and highs during series of trades within a given time period. It is generally thought that it is found in topping formations where they are mainly created due to unreal expectations of bullish investors However, these kinds of broadening formations are quite different from other consolidation formations. Hence,much larger levels of volatility is noted with the passage of time . Moreover, increasing volumes levels are noted as the share price rises with the passage of time. In addition, it should be noted that these kinds of consolidation patterns are mostly created during a bullish position rallies