Broadening Wedge TopsTrading Broadening Tops
The breakout direction for Broadening Tops
The trade is to buy when price touches the lower trendline for the third time.
Very often these patterns have partial rises and partial declines that are followed by a breakout. When price rises from the lower trendline and fails to make the upper trendline it is likely to breakout lower. When price falls from the upper trendline and fails to make the lower trendline then the breakout is likely to be upwards. In my experience partial declines are more consistent with producing upward breakouts than partial rises are in producing downward breakouts.
The breakout occurs when price closes on the outside of the pattern, above the upper trendline or below the lower trendline.
Trade in the direction of the breakout.
