Web Trader MT5
A chart pattern. After a downtrend or a sharp drop, price stops falling and starts trading sideways in a range. This is basing. The thing being constructed is a “base,” from which (the theory goes) the next move higher will eventually launch.
Bases come in many shapes. Flat bases are simply rectangles. Cup-and-handle bases curve along the bottom and form a small dip on the right side before the breakout. Rounded bottoms are gentler U-shapes that take months to develop. The good ones share two features: time (long enough that previous holders have given up or distributed) and tightening price action (smaller daily ranges, falling volatility).
Momentum traders, particularly those who trade growth stocks, watch bases obsessively. The bet is that breakouts from well-formed long bases are the highest-quality long entries on the chart. The risk is that not every base breaks out. Some just become deeper bases.
Example: Nvidia spent most of 2015 and early 2016 trading between roughly $20 and $25, building what chartists later identified as a multi-quarter base. The breakout above $25 in mid-2016 marked the start of the rally that, with corrections, took the stock through $1,000 and beyond.
