The Megaphone pattern, also known as the Broadening Formation, is a volatile chart pattern characterized by expanding price swings, forming higher highs and lower lows. It indicates increasing market uncertainty and can signal potential reversals or continuations.

Identifying the Pattern
Higher Highs & Lower Lows: The price makes higher peaks and lower troughs successively, creating a widening range.

Two Trendlines: Connect the ascending peaks (resistance) and descending troughs (support) to form a megaphone shape.

Trading Strategy
Breakout Confirmation: Wait for a decisive breakout above resistance or below support.

Volume Check: A breakout with strong volume increases reliability.

Entry Point:

Bullish Breakout: Enter long if price breaks above resistance, targeting the height of the pattern.

Bearish Breakout: Enter short if price breaks below support, with a similar target.

Stop-Loss: Place stops just inside the opposite trendline to limit risk.

Key Considerations
Megaphones often precede strong trend reversals.

False breakouts are common, so wait for confirmation.

Works best in high-volatility markets like stocks and forex.

By trading breakouts with proper risk management, the Megaphone pattern can offer high-reward opportunities.