Novice Traders' Notebook  |  JUN 2001

Broadening Bottoms and Complex Bottoms

Novice Trader's Notebook: Broadening Bottoms and Complex Bottoms BROADENING BOTTOM The broadening bottom is virtually the same as the broadening top, except it is reversed. Like the broadening top, the broadening bottom forms a symmetrical triangle. Although the broadening top is a rare formation, the broadening bottom is even rarer. Figure 1 shows a typical broadening bottom with three successively lower lows and two successively higher highs that combine at the end of a downward move. This gives the impression of an erratic market, as the swings in both directions get wider each time. The pattern is completed when, usually on the third upswing within the pattern, prices break above the prior high but fail to fall below this level again.

by Technical Analysis, Inc.