Sometimes knows as a “saucer bottom” pattern, this one is known for being able to predict long term upward trend. Very similar to the “cup and handle” pattern, only without the bother of a temporary downward trend that makes up the “handle.”
This pattern can be spotted at the end of depressingly long downward trends. The timeframe for this pattern can be weeks, months, or even years in length and is considered to be one of the more rarified patterns to form in the marketplace. Most of the time this pattern indicates that the long downward trend, often caused by an excess of stock supplies, is coming to an end as investors start to buy in at low price points reversing the downward movement. Once this starts, it typically increases demand.
This allows the stock to “break out,” and begin a long-lasting and positive reversal that investors can take advantage of if they choose to be one of those who buy low and are willing to sit on the stock for a while until it tops out again. This is because the length of time for recovery can be varied, and may take a long time to find its peak. Investors should prepare for this lengthy-time period and have patience while the price continues to build.