With the stock market climbing and consolidating every few weeks this year, many stocks have formed base-on-base patterns. Keep an eye out for those, because they tend to be strong chart formations.
The base on base is, of course, a combination of two bases. A stock forms a base but doesn’t rise in price much from the buy point. That’s often because the general market comes under selling.
So, a new base starts taking shape at a higher elevation than the first. On a chart, the two patterns resemble the profile of two stair steps. Sometimes, the breakout from the second base will come after the selling pressure in the market has lifted.
Here are five characteristics to help identify the pattern.
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