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Page 146

Trading Broadening Swing

An important opportunity the "Broadening" patterns offer is trading the last swing. The
number of swings in "Broadening" patterns is five. If the trend formation in the pattern is to
the upside, then trading the fifth swing would be downside and can be traded from the top
trendline. Similarly, if the trend direction before the pattern is to the downside, then the fifth
swing will be to the upside. Keep in mind that "broadening" patterns are not infallible.
However, they have a high success rate depending on where and when they form in a trend.

Trade: In "Broadening tops," the potential trade is to go short at the beginning of the fifth
swing. When the prices reach the top of the trend line, enter a short position when prices start
declining and closed below the previous low. Similarly, in "broadening bottoms," a long trade
is possible at the lower trend line. Enter a long trade when prices start making higher highs
above the lower trend line and when the price closes above the previous high.

Target: A typical target for the last swing in a "Broadening" pattern would be the trend line
on the opposite side of the pattern. Historically, this is the widest part of the pattern and is a
very profitable setup.

Stop:
"Broadening" patterns are not infallible. They do fail and have significance as to how they fail.
The pattern may be indicating a breakoutibreakdown rather than a reversal of the trend. A
"stop" order is placed if prices reverse and trade outside the trend lines.

Stop-

? Target

Trade Chart Patterns Like The Pros

Page 147

The example above illustrates a "Broadening swing" trade from the Russell Emini (ER2) 15
minute chart. The ER2 chart shows two significant swings in a broadening channel as it made
higher high swings and lower low swings. After two complete swings, ER2 presented an
opportunity to trade the last swing from 4 to 5. When prices reach the bottom trend line at
marker 4, wait for a reversal bar (close above previous high) before entering the trade.

1. Enter a "long" trade on the bar above the previous bars7 high.
2. Place a "stop" order below the trend line low.
3. Take partial profits at the mid channel line.
4. Target is set at the upper trend line.

Trade Chart Patterns Like The Pros

Page 292

Bibliography

1. "Dynamic Time and Price Analysis of Market Trends" by Bryce Gilmore.
2. "The Harmonic Trader" by Scott M . Carney
3. "Harmonic Trading of the Financial Markets: Vol. One" by Scott Carney
4. "Harmonic Trading of the Financial Markets: Vol. Two" by Scott Carney
5. "New Frontiers in Fibonacci Trading" by Michael Jardine
6. "Fibonacci Ratios with Pattern Recognition" by Larry Pesavento
7. "Street Smarts" by Larry Connors and Linda Raschke
8. "Fibonacci for the Active Trader" by Derrick Hobbs
9. "Profits in the Stock Market" by H.M. Gartley
1 O."Geometry of Markets I " by Bryce Gilmore
1 1 ."Geometry of Markets IT' by Bryce Gilmore
12. "Beyond Candlesticks" by Steve Nison
13 ."Japanese Candlestick Charts" by Steve Nison
14."Technical Analyis and Stock Market Profits" by Richard Schawbacker
1 S."Trading for A Living" by Dr. Alexandar Elder
1 &"The Symmetric Wave Trading Method" by Michael Gur
17."Essential Technical Analysis" by Steven Leigh
1 %"The Ultimate Trading Guide" by John Hill, George Pruitt and Lundy Hill
19."High Probability Day Trades In The Futures Markets" by J.T. Jackson
20. "Advanced Commodity Trading Techniques " by J.D. Hamon
2 1 . "Advanced Trading Strategies " by Laurence Connors
22. "Fibonacci Applications and Strategies for Traders" by Robert Fischer
23. "The New Science of Technical Analysis" by Tom DeMark
24. "Trading to WinJ'-by Ari Kiev
25. "The Disciplined Online Investor" by Steven Hendlin
26. "Market Wizards", "The New Market Wizards" by Jack Schwager
27."Principles of Professional Speculation" by Victor Sperandeo
28."The Winning Trader" by Michael Shopshire
29."How to be a Successful Trader" by Dr. Ned Gandevani
30."Mastering the Trade" by John F. Carter
3 1 . "Momentum, Direction and Divergence" by William Blau
32."Build Winning Trading Systems" by George Pruitt and John R. Hill
33."Day Trading with Short Term Price Patterns" by Toby Crabel
34."Secrets of the Undergroundtrader" by Jea Yu and Russell Lockhart
35."Forex Trading for Maximum ProJit" by Raghee Horner

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About the Author
Suri Duddella is a successful, private trader for the past 12 years using his
proprietary mathematical models and analysis. Prior to joining the financial
markets, Suri was an engineering consultant for Fortune 100 companies.

Suri Duddella was a founder of a financial research and analysis company from
1998 to 2005 specializing in financial modeling, researchlanalysis, and
technology architecture for financial institutions, investment research and
investment media companies. Suri's research company was ranked the "Best of
the web" by Forbes magazine from 2000 to 2003 and featured in Barrons' as an
"Excellent Technical Analysis site" in 2002.

Suri Duddella's research has been reviewed and featured in Forbes, Barrons',
ActiveTrader, Stocks and Commodities, and Washington Business Journal
magazines and newspapers. Suri has also appeared on various television and
radio shows. In addition, he presented his research at various investment
conferences in the United States. Suri has published market analysis articles for
Active Trader, Stocks and Commodities, Chartpoint, and Traders World
magazines. Suri Duddella's trading methodology and interview was published in
"Bulls, Bears and Brains of Financial Internet," John Wiley, 2002 by Adam
Leitzes and Joshua Solan.

Suri Duddella's research website is at www.suriNotes.com, where he updates
some of his trading perspectives and research ideas. He may be reached at
[email protected]

Trade Chart Patterns Like The Pros

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