Flat Base Pattern

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

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Flat base pattern

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

Flag and pennant pattern

The flag and pennant pattern is used to spot continuation patterns. It informs traders if a downtrend is a reversal or just a correction.
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The bull flag/pennant captures a downtrend in an uptrend.

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The bear flag/pennant captures a downtrend in an uptrend.

Volume should diminish as the flag or pennant pattern mature, and volume should increase at the break.

Wedge Chart Pattern

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Market is in a downtrend and reverses into an uptrend.

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Market is in an uptrend and is undergoing a correction. After correction, market continues in an uptrend.

Note: Declining volume going into the break and rising volume on the break. Also, the duration the market took to complete the wedge serves as a good gauge as to how long the market will take to reach the target price.

Head and shoulders

– Stop loss placed on the right shoulder

– To further confirm the downtrend:

1. The neckline should be downward sloping

2. Volume running up to the head should be lower then volume running up the first shoulder, and volume running up the second shoulder should be lower than volume running up to the head

3. Volume should be large when price breaks the neckline

– Stop loss placed on the right shoulder

– To further confirm the trend:

1. The neckline should be upward sloping

2. Decreasing volume going into first shoulder, head and second shoulder

3. Increasing volume on the break of the neckline