Flat Base Chart Pattern

Stocks that have large price gains typically will stair-step upward and form Flat Bases before resuming their up trend.  This action may occur several times as a stock remains in an up trend and could last from a few days to several weeks depending on the situation.  Flat Bases are characterized by small daily trading ranges with volume being lower than normal.  Although it doesn't happen every time, the longer a stock remains in a Flat Base, the greater the price appreciation may be when the stock breaks out.  Lets look at some examples below.

Here is a chart of EMLX.  Notice how it formed a Flat Base (small trading range)  from July through mid-August and then broke out of the base in on increasing volume (point A).  It then formed another Flat Base in September and broke out of this base in early October and skyrocketed from $80 to $200.

Another example of a stock that had a few Flat Bases was KIDE.  Notice in May and June the small daily trading ranges with low volume.  Then in early July the stock broke out with increasing volume (point A) and went from $10 to $30 by mid-August.  KIDE then formed another Flat Base from mid-August though early October and then exploded out of the base on higher volume (point B).  The stock then went from $30 to $90 in four weeks.  The total gain from July to November was 800% ($10 to $90).