Chapter 3 Definitions, Structures, & Examples
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Nirvana Systems Inc.
3-13
Profiting with Chart Patterns
Saucer Patterns
Our third pattern is Saucers. Saucers are very tradeable
patterns and have strong
psychology. The idea is that you have a smooth transition in price from a downward
trend to an upward trend. People looking at the chart can see that curvature. This
pattern takes advantage of human nature—when we see something curving up, that is
good. You want to get on the bandwagon and trade the move because it is probably
going to keep curving up. The smooth transition reinforces the buy decision. More
buyers jump on and there you go—it reinforces itself and accelerates.
Figure 3-12.
Saucer Pattern
Chapter
3 Definitions,
Structures,
&
Examples
Profiting with Chart Patterns
3-14
nirvanasystems.com
Saucer Pattern Structures
Here is the structure for a saucer. It is a little different from the prior structures. It
actually has some dimensionality to it. We have several patterns like this that we are
going to cover in subsequent sections. In this example
look at the center of your
saucer and go back to the relative high which formed ahead of the saucer. The target
will be at a distance of about 6/10 of that to the right and about half way up. So, draw
your Eights scale from the previous high to the low and go to the 50% level. Project
this level right of center and this is about where the chart should move. This also gives
you a great Reward:Risk calculation.
Figure 3-13.
Saucer
Structure Diagram
If we break through the lows formed by the saucer, that is an equally tradeable pattern.
This is a very rare occurrence but does happen sometimes if bad news enters the
market. If that occurs the stock is going down.