A period of price consolidation — lasting typically 7-65 weeks — where a stock moves sideways or slightly downward after an advance, forming the launch pad for the next move higher.
Deeper Explanation
Base patterns are where institutional accumulation occurs invisibly. While the stock appears to be going nowhere, large funds are quietly building positions — absorbing the selling from impatient or short-term holders. The most important base patterns: the Cup and Handle (a U-shaped correction followed by a small dip before breakout), the Flat Base (a tight sideways consolidation of at least 5 weeks), and the Double Bottom (a W-pattern reset). The depth, tightness, and volume characteristics of a base tell you about the supply/demand balance. A tight base (small weekly price ranges) shows the stock is under accumulation by patient buyers. A loose, volatile base shows little institutional conviction.
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