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What does a megaphone top mean?

For example, after a strong uptrend, if a megaphone pattern forms that is considered a megaphone top. Megaphone Top is considered a bearish signal–it can indicate a trend reversal to the downside. The opposite of a bullish megaphone top is called a megaphone bottom. This patterns forms after a strong downtrend.

What do megaphone patterns look like?

In essence, megaphone patterns look like a reverse symmetrical triangle. In bull markets (weekly and monthly bullish trends), downward megaphones on 60-minute and 4HR time frames can lead to epic bullish reversals. Take the chart of $SPX here as an example. You can see on this 60-minute chart how well the downward megaphone structure has emerged.

Can a megaphone pattern be a continuation of a trend?

A megaphone pattern by default is either bearish or bullish signal after an upward or downward trend, so no. But it doesn’t mean it cannot be a continuation of a trend. A megaphone top can most certainly be a continuation to more upside. The same goes for a megaphone bottom.

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