Saucer Pattern         

Saucer and Inverse Saucer Patterns

With pattern analysis, technical analysts look for specific trading patterns that have yielded consistent trends in trading history. One popular pattern is the Saucer pattern; another is the Inverse Saucer formation.

A saucer pattern occurs at market bottoms and predicts a gradual trend reversal. It is formed when prices dip gradually lower, then gradually turn higher, forming a saucer shape on the price chart. Volume traces out a similar shape, decreasing as it approaches the bottom and increasing as the prices rise on the other side, leading to very strong volume as it breaks out upward, when an increasing number of investors recognize the trend reversal. Saucer patterns can last for mere weeks or extend into years. The new trend that develops may last a similar duration to the previous trend it reversed. This pattern is also called a Basing Pattern or a Rounded Bottom.

An inverse saucer pattern occurs at market tops and predicts a gradual trend reversal. It is formed when prices rise gradually upward, then gradually turn lower, forming an inverted saucer shape on the price chart. Volume traces out the mirror shape, decreasing as it approaches the top and increasing as the prices dips on the other side, leading to very strong volume as it breaks out downward, when an increasing number of investors recognize the trend reversal. Inverse saucer patterns can last for mere weeks or extend into years. The new trend that develops may last a similar duration to the previous trend it reversed. This pattern is also called a Rounded Top.

You can increase your profits in option trading by considering both fundamental analysis and technical analysis. When you are analyzing potential option positions, it helps to have a computer program like Option-Aid that swiftly calculates volatility impacts, probabilities, statistics, and other parameters of interest. These programs can pay for themselves with the first trade that they help you with.

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