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How to trade a flat base (FB) pattern?
A flat base pattern is long flattish movement of share price.
Usually, I would invalidate > 30% move from FB pattern if I am using monthly candles. For weekly my barometer is 15%.
In most cases, FB pattern gives a very strong breakout. In some cases annualized returns > 100 % can be expected.
Rather than keeping fixed targets for such breakouts, a 20% trailing stoploss would give a better result.
Ideal usage of FB pattern is weekly and monthly timeframes.
RSI between 40 and 60 during the flat base and RSI > 60 after breakout is a confirmation to the trade.
Credits of the idea - Bullkowski's book on chart patterns
Disclaimer: All investments and trading in the stock market involve risk. Any decisions to place trades in the financial markets, including trading in stock or options or other financial instruments is a personal decision that should only be made after thorough research, including a personal risk and financial assessment and the engagement of professional assistance to the extent you believe necessary. The trading strategies or related information mentioned in this article is for informational / educational purposes only.
Usually, I would invalidate > 30% move from FB pattern if I am using monthly candles. For weekly my barometer is 15%.
In most cases, FB pattern gives a very strong breakout. In some cases annualized returns > 100 % can be expected.
Rather than keeping fixed targets for such breakouts, a 20% trailing stoploss would give a better result.
Ideal usage of FB pattern is weekly and monthly timeframes.
RSI between 40 and 60 during the flat base and RSI > 60 after breakout is a confirmation to the trade.
Credits of the idea - Bullkowski's book on chart patterns
Disclaimer: All investments and trading in the stock market involve risk. Any decisions to place trades in the financial markets, including trading in stock or options or other financial instruments is a personal decision that should only be made after thorough research, including a personal risk and financial assessment and the engagement of professional assistance to the extent you believe necessary. The trading strategies or related information mentioned in this article is for informational / educational purposes only.
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