This morning, while having my bath, I had a very interesting existential or natural experience. I was enjoying the lovely green leaves of a nearby neem tree. I suddenly noticed a saucer formation formed by a bunch of leaves in one of the branches of the tree.
I am an ardent lover of Saucer formation in Technical Analysis of the Stock Market. I briefly wrote about saucer formation in my blog post dated August 25, 2010. In that blog, I wrote more about flag formation and only made a passing reference to Saucer formation. May be, that is the reason the powerful existence gently reminded me to write more about Saucer formation today.
A flag formation is a pattern that occurs when there is a straight upward or downward move in a stock. It looks like a flag on the price chart and hence the name. A saucer is formed when prices dip gradually lower, then gradually turn higher, forming a saucer shape on the price chart.
It is a fact that saucer formation takes more time to reach the price objective as compared to a flag. Notwithstanding that, a saucer formation has the following merits:
- The objective is measurable.
- Returns are attractive.
- In my opinion, the probability of success is higher in saucer formation as compared to a flag formation.
- Saucer formation is a better predictor of reversal in trend from downward to upward.
The more you read and start observing the Technical Analysis of the Stock Market, you develop your expertise. More than the results, I see an inexplicable beauty in the charts, possibly because I am a Mathematics graduate. The more I start to enjoy, the more the existence keeps reminding me about the beauty of the charts. So, you can expect more articles on this subject!
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