Inverse Saucer

What Is an Inverse Saucer?

An inverse saucer is a technical charting pattern that demonstrates that a given stock's price has arrived at its high. As per this technical indicator, this formation demonstrates that a stock's vertical trend has reached a conclusion. An inverse saucer is otherwise called a "adjusted top" or "rounding top".

An inverse saucer happens when there is a consistent smoothing of the uptrend. This happens so much that the market at one moment enters a sideways range, however at that point slowly begins to fall lastly advances descending. An inverse saucer is a rare formation; it gives no reasonable price target except for generally shows that the stock is at risk for a precarious price drop. Retracements of the former uptrend have been noted in inverse saucer patterns.

How an Inverse Saucer Works

Inverse saucers happen as expectations about a stock continuously shift from bullish to bearish. At the end of the day, an inverse saucer happens as investor sentiment about a stock shifts from positive to negative — from the conviction that a stock's value will go higher to the expectation that it will fall lower.

The continuous yet consistent shift forms an adjusted top. Volume — which was high during the previous trend — diminishes as expectations shift and traders become hesitant. The volume then, at that point, increments as another debilitating trend descending is laid out.

An inverse saucer pattern can forecast a more serious breakdown of the price of the security in a short time period. An inverse saucer can likewise be followed briefly by what is known as a handle, which mirrors a partial recovery of price from its decline before the price slips once more.

These two patterns have been more than once noticed, however there is no guarantee, normally, that they always happen. Generally talking, however, inverse saucers are bearish indicators, and traders who follow these indicators make a move to safeguard long positions when inverse saucers happen — for instance, by setting stop losses or by shorting these weak securities.

Saucer versus Inverse Saucer

An inverse saucer is connected with the technical charting pattern called a saucer. Outwardly, a saucer gives off an impression of being the inverse (or the reverse) of an inverse saucer. In like manner, a saucer forms when a security's price has arrived at a low and starts trending vertically. (On the other hand, an inverse saucer forms when a security's price has arrived at a high and is anticipated to trend descending.) A saucer is alluded to as a rounding base.

Volume during inverse saucers frequently reflects the bowl-like state of prices during a saucer.

Highlights

• As per this technical indicator, this formation demonstrates that a stock's vertical trend has reached a conclusion.
• An inverse saucer is a technical charting pattern that demonstrates that a given stock's price has arrived at its high.
• An inverse saucer happens when there is a consistent leveling of the uptrend.
• An inverse saucer is a rare formation; it gives no reasonable price target except for ordinarily demonstrates that the stock is at risk for a precarious price drop.