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Other Reversal Pattern

RIGHT-ANGLED FORMATIONS

A member of the triangle family that is not well known, right-angled formations can be identified when a horizontal trendline forms on top and a lessening price trend forms on the bottom. These formations are distinctive in that a 90-degree angle is formed either at the top or the bottom. Right-angled formations are usually denoted as ascending broadening and descending broadening (see below):

Ascending broadening

This formation occurs when a horizontal base with upsloping trendline forms a right triangle, with the third side dropping and intersecting the base at a 90-degree angle.

Descending broadening

This formation occurs when a horizontal top appears with lower lows following a downsloping trendline. According to Thomas Bulkowski, the formation looks like a "megaphone with the top held horizontal." In this formation, prices climb until they touch the top trendline, then reverse on the lower edge and the prices decline, making a series of lower lows until the lower trendline is touched. In this case, the 90-degree angle is formed at the top.

--EMS Flynn

REFERENCES

Bulkowski, Thomas [2000]. Encyclopedia Of Chart Patterns, John Wiley & Sons.
_____ [2002]. Trading Classic Chart Patterns, John Wiley & Sons.
Meyers, Thomas A. [1989]. The Technical Analysis Course, Probus Publishing Co.
Murphy, John J. [1986]. Technical Analysis Of The Futures Markets, New York Institute of Finance.

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