Expanding formation

Expanding formation

The expanding formation belongs to the category «reversal patterns» graphical analysis.

Meets model expanding formation rare and unusual for a triangle. Only a triangle is formed with lines, which taper, and figure expanding formation formed by lines, which expand. This model graphical analysis signals a clear weakening of the previous trend.

Volume. With an increase in the amplitude of oscillations, the volume also increases. The market goes out of control, traders have more and more emotions and less common and cold mind.

Features of model education «expanding formation»

False signals are very common, which greatly complicates the work of traders. Especially the model expanding formation can bring trouble for traders, working on the breakout of the previous peak.

Completing the figure «expanding formation»

A signal to sell will be a breakdown of the support line (bottom line of the figure). Also an expanding formation pattern also called the five-point trend reversal pattern, since it has three upper and two lower extrema.

After the sell signal, the price may be refunded up to 50% from the previous segment of the fall in prices and after that the resumption of the bearish movement will follow.

Same model using «mirror rules» may form at the bottom of the market.

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