Broadening Bottom – A broadening bottom forms in a downtrend and potentially signals a bull market reversal. It forms what looks like a megaphone as the price expands with higher highs and lower lows. This chart pattern gives the appearance of a potential correction before moving lower, but instead signals a reversal in the previous trend. A broadening bottom is a form of consolidation and forms a support and a new foundation for the bull reversal.
Confirmation of Chart Pattern – A Broadening bottom is confirmed when the price stalls prior to making a lower low (after making at least 2 highs and 2 lows) and heads higher taking out the previous high.
Psychology of Pattern: This chart pattern exhibits a unique shape; since its primary characteristic is that it has higher highs and lower lows. This chart pattern shows us a market that is attempting push lower by luring more sellers in by causing more fear.
Market Signal – The Broadening Bottom is a bullish reversal.