Bulkowski’s Broadening Formations, Right-Angled and Ascending

 
The right-angled and ascending broadening chart pattern is not one you should consider trading. Many other chart patterns perform much better. Downward breakouts have a large break even failure rate which should disqualify them from your trading arsenal. Upward breakouts have only a middling average rise, and that's if you trade them perfectly. For more information see pages 28 to 44 of the book Encyclopedia of Chart Patterns, Second Edition and the following...
Ascending right angled broadening formation
Right angled and ascending broadening formation

Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 19 out of 23; 19 out of 21
Break even failure rate for up/down breakouts: 11%; 20%
Average rise/decline: 29%; 15%
Throwback/pullback rate: 47%; 65%
Percentage meeting price target for up/down breakouts: 68%; 32%

Identification Guidelines

Characteristic Discussion
Price trend Can be up (66% have a rising price trend) or down (34%) leading to the pattern.
Shape A megaphone tilted up with the bottom horizontal.
Trendlines The bottom trendline is horizontal, the top one slopes upward.
Touches At least two peaks and two valleys should touch their respective trendline.
Volume Trends upward 54% of the time and downward 46% of the time.
Breakout Downward 66% of the time.

Trading Tips

Trading Tactic Explanation
Measure rule Compute the height from the highest peak (point A in the Measure Rule figure to the right) to the horizontal trendline (B) and multiply it by the above “percentage meeting price target.” Add the result to the highest peak (A, upward breakouts) or subtract it from the horizontal trendline (B, downward breakouts) to get the price target (C).
Intraformation trade Buy at the horizontal trendline when price starts rising and sell or sell short once price turns at the top trendline.
Buy at 3rd touch When price touches the horizontal trendline for the third time and begins rising, buy.
Partial rise A partial rise works 74% of the time.
Partial decline A partial decline works 81% of the time.
Price trend The best performing patterns are those with a short-term (less than three months) rise leading to the pattern.
Yearly high, low Downward breakouts perform best when the breakout is within a third of the yearly low. For upward breakouts, performance is best when the breakout is within a third of the yearly high.
Volume trend A downward volume trend results in the best postbreakout performance.
Throwbacks and pullbacks Throwbacks and pullbacks hurt postbreakout performance.
Height, width Tall patterns perform better than short ones. Wide patterns (upward breakouts) and narrow patterns (downward breakouts) perform well.
Ascending and right angled broadening formation measure rule
The Measure Rule

Example

Ascending and right angled broadening formation chart pattern example

The above figure shows an example of an ascending and right angled broadening formation. A strong advance begins at point D and that leads to the ascending and right angled broadening formation. Price bounces between two diverging trendlines before it closes outside the bottom trendline at A. This marks the downward breakout. Price recovers and busts the pattern at C when price moves above the top of the chart pattern. A throwback completes at B and price climbs thereafter.