A tight sideways price consolidation of 5+ weeks after a prior advance, with less than 15% depth — a sign that sellers have been absorbed.
“A flat base must be flat — no more than 10–15% deep — and tight, meaning weekly closes are clustered closely together. Tightness indicates that selling is drying up and the stock is being held by strong, patient hands. — William O'Neil”
— William O'Neil
Deeper Explanation
The flat base is one of the three primary chart patterns that momentum investors use for entry signals, alongside the cup-and-handle and the Volatility Contraction Pattern (VCP). It forms when a stock that has already advanced 20% or more enters a period of controlled consolidation, trading in a narrow range with declining volume. The flatness of the pattern signals that sellers are not aggressive — the stock is not being dumped, it is merely pausing. When price breaks above the top of the flat base on elevated volume (40–50% above the 50-day average), it signals that institutional buyers have re-engaged and the prior uptrend is resuming. Flat bases often produce shorter but very reliable moves compared to the deeper cup-and-handle pattern.
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