Chart pattern: Saucer
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What is a saucer?
A saucer is a chart pattern with a trough in the shape of a "U".
A saucer’s "U" shape is generally very rounded with a flat bottom.
The neck line of the saucer pattern is determined by the high point preceding the U’s formation.
A saucer pattern has no theoretical price objective.
However, some authors measure the height of the "U", from the lowest point to the neck line, then plot that as an objective above the neck line (as with a double bottom).
This practice is not recommended because statistics show us that this objective is only achieved in 36% of cases.
The recommended theoretical price objective is to measure the depth of the U and divide it by 2 and then plot that above the neck line.
The saucer " has long been considered as a reversal pattern. Once the neck line is broken, the results are very good. However, Bulkowski's work has shown that in many cases, the saucer pattern is actually a continuation pattern.
Graphical representation of a saucer
Statistics on saucer patterns
- In 62% of cases, the pattern indicates a bullish reversal.
- In 86% of cases, the price line breaks the neck line upward.
- In 95% of cases, the bullish movement continues after the bullish break in the neck line.
- In 40% of cases, the price makes a pullback in support on the saucer pattern’s neck line.
- In 57% of cases, the recommended price objective is achieved (height divided by 2).
Notes on saucer patterns
- With a saucer figure, the price often pauses when it returns to the neck line.
- The flatter the trough, the more forceful the movement at the break of the neck line.
- After exiting the saucer pattern, pullbacks in support on the neck line make the bullish movement less forceful.
- If a large bullish peak occurs after the formation of a saucer pattern, it is then possible to draw a bearish line to connect the high point that preceded the formation of the saucer and the high point of the bullish peak. The break in this bearish line provides the first bullish signal.
