Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 132

Are there some guidelines that can assist in identifying descending broadening formations? Yes, and Table 10.1 outlines them.

Appearance. The shape of the broadening chart pattern looks like a megaphone with the top held horizontal. Price climbs until it touches the top trendline, and then reverses direction. On the pattern's bottom, price declines, making a series of lower lows, following a trendline downward.

Table 10.1 Identification Guidelines

Characteristic	Discussion
Appearance	Looks like a megaphone, tilted down, with the top of the chart pattern horizontal and bounded on the bottom by a down‐sloping trendline.
Horizontal top resistance line	A horizontal line of resistance joins the minor highs, shown by drawing a trendline connecting the peaks.
Down‐sloping trendline	The expanding price series is bounded on the bottom by a down‐sloping trendline.
Touches	Look for at least five trendline touches, three on one trendline and two on the other. They need not be alternating touches. Price slicing through a trendline doesn't count as a touch.
Whitespace	Price should bounce from trendline to trendline, erasing most whitespace in the pattern.
Breakout direction	Price can break out in either direction, usually accompanied by a rise in volume that soon tapers off.
Partial rise or decline	For an established pattern, when price climbs toward the top trendline or declines toward the lower one but fails to touch it, price often reverses direction and breaks out of the broadening pattern.
Volume	Trends upward most often (but almost random). Don't discard a pattern with a downward volume trend.
Support and resistance	Follows the two trendlines into the future but is sporadic.

Horizontal top resistance line. When two (preferably more) minor highs achieve the same, or nearly the same price, you can draw a horizontal trendline connecting them, forming the top of the pattern.

Down‐sloping trendline. The same applies to the down‐sloping trendline: It requires at least two distinct touches before drawing the trendline (more touches are better).

Touches. I prefer to see at least five trendline touches, three on one trendline and two on the other, with all five being minor highs or minor lows (peaks or valleys). Fewer than five touches make correct identification more difficult.

Whitespace. Figure 10.4 shows an identification problem at AB. There are two trendline touches along the top (as minor highs) and four touches as minor lows along the bottom. The pattern looks like a descending broadening pattern.

It's not.

See that chunk of whitespace at B? Price doesn't cross the pattern often enough to qualify it as a valid broadening pattern. The inset at C shows that the pattern is better drawn as a down‐sloping channel. This chart is an example of cutting off a turn and calling it a descending broadening pattern. Do not tell anyone that you found a broadening pattern after you cut off a turn. What you found was a mistake.

Breakout direction. A breakout occurs when price closes outside the trendline boundary. Breakouts can occur in either direction.

Partial rise or decline. A partial rise, as shown in Figure 10.3, or a partial decline (not shown), is often a clue to the ultimate breakout direction. When price curls around on a partial rise or decline and returns to the trendline, the stock will usually break out immediately (that is, without crossing the chart pattern again).

Figure 10.4 AB is not a descending broadening formation.

Volume. Volume tends to rise over the length of the chart pattern, sometimes following the price movement.

Support and resistance. The pattern's trendlines, when extended into the future, can sometimes act as areas of support or resistance. Figures 10.1, 10.3, and 10.7 show examples. Sometimes the support or resistance level is active for months or even years.