Broadening Top Chart Example

The chart above of Chevron (CVX) shows a broadening top during an uptrend. Prices enter from below (trait distinguishing a broadening top from a broadening bottom) and then create two higher highs and three lower lows forming the minimum requirement for the downtrending support and uptrending resistance lines. Prices break above the overhead resistance trendline and continue the move higher, profiting from either price target calculation used: the height of the pattern plus breakout price or height of the pattern multiplied by 62% and then added to the breakout price above resistance. Bulkowski (2005) found that broadening tops that occur in an intermediate-term trend (between three and six months) perform better. The chart above occurs after a three month uptrend.