Flat base is a powerful chat pattern that has a box-like appearance. It usually forms after a breakout from cup and handle pattern or a double bottom pattern.
In a flat base, the consolidation lets the stock digest prior gains. Stocks can also form flat bases when the overall market is in a downtrend or can’t muster much progress.
A flat base is one of the shorter price patterns. It only needs a minimum of five weeks to take shape. Most other price structures need at least seven weeks.
– Correction in the base should be no more than 15% from the stock’s peak
– Volume on breakout day should be 40% more than average
– Entry price is 10c more than the high of the pattern