DEFINITION of 'Basing'

A period in which a stock or other traded security is showing little in the way of upward or downward movement. The resulting price pattern is a flat line. Often, 'basing' is a term used by technical analysts to describe an issue that is consolidating after a period of rapid growth or decline. A basing stock is one with equal amounts of supply and demand.

Basing

BREAKING DOWN 'Basing'

Basing is a common occurrence after a stock or the market has been in a lengthy decline or has increased by a large amount. In other words, the market is taking a break. Some stocks can form a base that lasts for severals years before the trend is reversed.


A basing stock is also thought to be one that is forming new lines of support and resistance. In essence, basing is the merging of previous lines, which leads to the formation of different ones. Many technical analysts believe that basing is crucial, especially for surging stocks. They view basing as the "breather" that allows the issue to continue climbing.

RELATED TERMS
  1. Base Year

    The first of a series of years in an economic or financial index. ...
  2. Pattern

    In technical analysis, the distinctive formation created by the ...
  3. Reference Base Period

    A year in which the Consumer Price Index is equal to 100, a reference ...
  4. Technical Rally

    An upward movement in a security's price following a declining ...
  5. Rounding Top

    A chart pattern used in technical analysis which is identified ...
  6. Bottom

    The lowest point or price reached by a financial security, commodity, ...
Related Articles
  1. Investing

    Value or Growth Stocks: Which is Best?

    The answer to the age-old growth versus value debate depends on a number of factors. Here's what to consider.
  2. Financial Advisor

    Advising FAs: How To Explaining Stocks to a Client

    Without a doubt, common stocks are one of the greatest tools ever invented for building wealth.
  3. Trading

    Use Price Action Trading Strategy for Results

    Bored by the fixed rules of technical and fundamental analysis? Price action trading allows you to customize your own trading strategy.
  4. Taxes

    Explaining the Tax Base

    A tax base is the value of assets, investments or income streams that a government can tax.
  5. Investing

    Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  6. Trading

    Mastering Short-Term Trading

    Making money in a pressure-cooker environment is all about minimizing risk on hot picks.
RELATED FAQS
  1. How do I identify a stock that is under consolidation?

    Discover the three major characteristics that stocks or securities exhibit when they are trading under a period of price ... Read Answer >>
  2. What are the differences between patterns and trends?

    Learn the difference between a pattern and a trend. Explore how technical analysts use patterns and trends to identify trading ... Read Answer >>
  3. What are some common strategies used when a stock is under consolidation?

    Read more about what trading opportunities can be realized while a stock is under consolidation and trading within a seemingly ... Read Answer >>
  4. Are continuation patterns useful in forex trading and stock trading?

    Learn what a continuation pattern is in technical analysis and why it is useful in forex and stock market trading, and discover ... Read Answer >>
  5. What types of data are necessary to make a technical analysis?

    Understand what technical analysis is, the basic theory behind employing it and what data inputs are needed to conduct it. Read Answer >>
  6. What does it mean if a security is under consolidation and why is it important?

    Discover some of the different meanings for "consolidation" with respect to traded securities. Learn why consolidation is ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center