Broadening pattern

A broadening pattern is a chart formation where a stock makes a series of higher highs and lower lows at the same time, so the trend lines connecting its peaks and troughs spread apart rather than converge. Drawn on a chart, the widening upper and lower boundaries resemble a megaphone or horn shape, which is why the pattern is also commonly called a megaphone pattern.

The pattern reflects a market in which volatility and disagreement among investors are both increasing. Each new swing high exceeds the last, and each new swing low undercuts the one before it, meaning buyers and sellers are both becoming more aggressive and neither side is able to establish clear control. This tends to happen during periods of uncertainty, such as around a contested earnings report or a broader market environment where investors cannot agree on the correct price for the risk involved.

Unlike most classic chart patterns, a broadening pattern does not have a single reliable direction it tends to resolve in, which makes it harder to trade than something like a flag or a head and shoulders pattern with a more defined expected outcome. Its main practical use is as a warning sign, a stock or index showing this shape is signaling rising instability and an increased chance of a sharp move once the pattern eventually breaks, even though the direction of that move is not implied by the pattern itself.