Saucer

What Is a Saucer?

A saucer, likewise called a rounding bottom, alludes to a technical charting pattern that flags a possible reversal in a security's price. It forms when that security's price has arrived at a low and starts trending vertically.

Figuring out Saucers

Saucers for the most part form at a security's support levels, whether it be trendlines, channels, or whatever other measure that characterizes that security's supply/demand relationship. They happen when a financial instrument declines to a low and afterward starts trending vertically. This price action brings about a chart pattern looking like a "U" and is generally exceptionally adjusted with a flattish base.

Rounding bottoms are found toward the finish of extended downward trends and imply a reversal in long-term price movements. This pattern's time span can fluctuate from a long time to several months and is considered by numerous traders as a rare occurrence. Ideally, volume and price will move in tandem, where volume affirms the price action.

A few key components for saucer patterns include:

• A prior price trend, in this case downward, must exist.
• The decline in price ought to make a low, begin a uniting phase which diverts momentum from bearish to bullish, before switching course and breaking out over the neckline.
• The saucer's neckline can be recognized by the price point just before the rounding pattern begins forming, and is approved when the price turns around through that point.
• The volume can be an important indicator of a potential saucer formation since it will, typically, be lower when the trough of the pattern is reached.
• However there is no hypothetical price objective for the move higher, a few experts have suggested that one can take the depth of the U, partition that by two, and add that to the neckline.

Channels

Traders can utilize a wide range of channels to chart resistance and support trendlines around a security's price. Envelope channel patterns are liquid formations that can assist with following a security's price over long periods of time. A Bollinger Band channel is one of the most common envelope channels utilized. This channel draws resistance and support trendlines two standard deviations above and below the moving average. Different other envelope channels with contrasting procedures for charting trendlines likewise exist including Keltner Channels and Donchian Channels.

Traders seeking more tight resistance and support trendlines may likewise draw channels at the pinnacles and troughs of a security's price throughout a certain time span. These channels will be either ascending, descending, or sideways relying upon the security's price trend.

Saucer Trading Signals

Both envelope channels and standard trading channels are important patterns for a trader while seeking to distinguish and place profitable trades from a saucer formation. A saucer will typically form at the support trendline. It might happen from a selloff with high volume that pushes the price down to its lowest level. Frequently this low price level will be in the support zone, which is an area around the support trendline.

In the support zone, there is many times a great deal of price uncertainty. The support zone is referred to for filling in as the security's floor and accordingly it is anticipated that the price won't fall below that level. Notwithstanding, trading components, supply and demand, all factor into the security's price and can make the price keep trending lower below the support level. Volume can frequently be an important indicator right now since it is highly affected by the pricing sentiment of investors.

On the off chance that the price doesn't trend lower and starts an uptrend, then a saucer happens. This is the most anticipated movement and follows the traditional investing methodology. Typically, traders will need to buy the security or buy call options on the security at its lowest price to receive the rewards from a saucer pattern.

Highlights

• A saucer, or rounding base, is a chart pattern utilized in technical analysis and is recognized by a series of price movements that graphically form the state of a "U".
• Typically, traders will need to buy the security or buy call options on the security at its lowest price to get the greatest profit from an up-trending saucer pattern.
• Both envelope channels and standard trading channels are important patterns for a trader while seeking to recognize and place profitable trades from a saucer formation.