Technical Glossary / Chart Patterns
Megaphone Pattern
Another name for a broadening range: higher highs and lower lows.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
Megaphone pattern is the common name for a broadening formation. The picture is a loudspeaker on its side: each rally reaches further and each decline reaches further. Agreement about price is getting worse.
How to identify it
Use the same rules as a broadening formation. Two rising highs and two falling lows at minimum, lines diverging to the right. Do not also call it a wedge. A wedge converges.
Bullish reading
No built-in bullish resolution. Fading the upper line is a countertrend trade against a market that is making higher highs. If you take it, the invalidation is a new high, and it will be further away than the last one.
Bearish reading
Fading the lower line has the same problem in reverse. A more conservative use is to wait until the megaphone ends with a failed new extreme and a break of the prior swing.
Common mistakes
Treating "megaphone" and "broadening formation" as two different signals. They are one pattern with two names. This glossary keeps both entries because both names are used, and the reading is the same.
Limitations
Expanding swings punish fixed stops. The pattern is a warning about conditions as much as a setup.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.