Potential Problems with Broadening Pattern

Kirkpatrick & Dahlquist (2010) find many faults with the broadening pattern which include:

• For a breakout above resistance, prices are constantly making higher highs without any buy signal being triggered, reducing the potential gain from the eventual buy trigger; the same concept applies for breakouts below support, where prices are constantly making lower lows, reducing the size of the expected breakout move when it occurs.
• Because the range is so large after a broadening pattern, realistic places to put stop losses are quite far from the breakout price, increasing risk.
• Broadening patterns are rather rare and "are often difficult to identify".
• Performance is average at best, with the only top performer being the ascending broadening wedge.