A broadening top shapes like a megaphone and it is hard for a trader to spot the pattern because it is seen far less frequently than others. It could be referred to as inverted pattern, as they are formations which start with narrow fluctuations, and then widen with diverging resistance and support lines.
The classic technical analysis text by Edwards and Magee characterizes a broadening top as a market that lacks intelligent sponsorship. It is one in which the public is being whipped around and driven this way and that by rumors. Because it is so unpredictable, the broadening top pattern is extremely difficult to trade. There is no clear breakout to either the upside or downside edge of the pattern.
The Yen softened against the EUR and USD during Tokyo morning session. EURJPY went upward from 131.5 to 132.00 during the first two hours of Tokyo session. Just before lunch time in Tokyo there was the news concerning the speculative resignation of Japanese Finance Minister Fujuii. Price formed the classical broadening pattern after lunch in Tokyo.
My first entry was at the breakout of the resistance line of the broadening pattern and the 132.00 level. Target will be at around 131.50 area. Exit my entry at congestion of prices that formed a descending wedge. My second entry was on the breakout and retest of the resistance line of the descending wedge. Target at 132.00 area.
