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How To Buy Stocks: Flat Base Chart Pattern

Aside from cups with handles and double bottom bases, flat bases are one of the three most common and profitable chart patterns out there. Here's how you can spot one in the wild. Typically shorter and shallower than a cup with handle or a double bottom base, the flat base needs only 5 weeks to form and during that time shares should not decline more than 15 percent. Just like with other bases, these slight sell-offs marks a place where less committed investors are getting shaken out of the stock sometimes over the course of weeks or even months. Now a stock forming a flat base may already be on its way up you'll frequently see one form after shares have already broken out of a cup with handle or double bottom base. Think of a flat base as a place for a stock to take a breather before continuing to charge ahead. The buy point here is 10 cents above the highest point of the base which marks the most recent area of resistance. If the stock breaks through that ceiling and above average volume then there's a good chance it's ready to keep on climbing. Let's look at PayPal as an example. The payment processing company started working on a flat base in June of 2017 not long after breaking out of a cup with handle in March. A week later it cleared a 55.24 entry point you'll also see on this weekly chart that PayPal's relative strength line hit a new high marking out performance against the S&P 500 volume was also way higher than normal. On a daily chart you'll see that trading volume more than doubled as PayPal shares cleared the buy point. As always that's a sign of where the big money is moving, seeing institutional investors rush in on a breakout day is a good sign and remember, for all chart patterns the proper buy range extends up to 5% above the ideal buy point. From there, PayPal stock went on to rocket over 50% higher in just six months. That makes it a great example of how spotting a flat base could lead to major gains. MarketSmith India has been helping people invest smarter results by providing exclusive stock lists, investing data, stock market research, education and the latest financial and business news to help investors make more money in the stock market. Like us on Facebook :   / msindiaofficial   Follow us on Twitter :   / marketsmithind   Follow us on LinkedIn :   / marketsmith-india-293544124