Basing is a chart pattern used in technical analysis that shows when demand and supply of a product are almost equal. It results in a narrow trading range and the merging of support and resistance levels. The pattern is usually preceded by an uptrend or downtrend, followed by consolidation. This type of price action can be seen on all time frames but is most commonly found on daily charts.The key to profiting from basing patterns is to trade breakouts when they occur. A breakout occurs when the stock price moves out of the trading range created by the basing pattern. There are two types of breakouts: bullish and bearish . A bullish breakout signals that the bulls have taken control and prices will likely move higher, while a bearish breakout signals that bears have taken control and prices will likely move lower.
