Broadening Formation
A pattern of successively higher highs and lower lows, so the range widens over time.
How it is identified
Test: each swing high exceeds the previous high and each swing low falls below the previous low
Unit
qualitative
In depth
A broadening formation is the opposite of a triangle: volatility is expanding rather than compressing, and each swing is larger than the last. It is a difficult structure for most strategies because stops must be placed further away as the pattern develops, forcing progressively smaller positions for constant rupee risk. Practitioners associate it with disagreement and news-driven trading rather than with any directional bias. The entry describes an expanding range and makes no claim about resolution.
Worked example
Highs of ₹512, ₹534 and ₹560 with lows of ₹486, ₹470 and ₹448. The range widens from ₹26 to ₹112, so a position sized for the first swing carries more than four times the intended risk by the third.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Broadening Formation” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.