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The Right-Angled Descending Broadening pattern has a flat top resistance line and a downward-sloping support line, creating an inverted megaphone that expands downward. Despite the descending bottoms, this pattern is typically bullish — it breaks up more often than down.
The flat resistance shows a consistent ceiling, while the declining lows show increasingly wild downside swings. This is the mirror of the ascending version and is equally counter-intuitive.
The eventual breakout above the flat resistance catches shorts and bears off guard, as the expanding downside swings had convinced them the trend was bearish.
The flat resistance creates a false ceiling. Bears see price failing at the same level and assume it will always hold.
The declining lows look bearish and attract short sellers. Each new low seems to confirm the downtrend. But the flat resistance means buyers keep coming back at the same level — there's persistent demand above.
When resistance finally breaks, shorts covering and breakout buyers create a powerful rally. The deeper the descending lows went, the more shorts are trapped, and the bigger the squeeze.
Buy on breakout above the flat resistance line with volume confirmation. Alternatively, buy at the declining support with a tight stop below.
Below the most recent low (if buying the breakout) or below the support line.
The height of the pattern at its widest point, projected upward from the breakout.
Typically 1:2 or better given the wide pattern range.
Don't let the declining lows fool you — this pattern breaks up more often than down. The expanding downside volatility is shaking out weak hands, not confirming a bear trend.
When panic lows keep getting deeper but resistance holds flat, that's accumulation disguised as distribution. Buy the breakout above the flat ceiling.
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