DEFINITION of 'Inverse Saucer'

A technical chart formation that indicates the stock's price has reached its high and that the upward trend has come to an end. An inverse saucer is characterized by a steady flattening of the uptrend to such a degree that the market at one moment enters a sideways range, but then slowly starts to fall slowly and finally accelerates downward. This rare formation provides no clear price target but usually implies quite a lot of potential since 50% or more retracement of the preceding uptrend can be expected. Also known as "rounded top".

Inverse Saucer

BREAKING DOWN 'Inverse Saucer'

Inverse saucers occur as expectations gradually shift from bullish to bearish. The gradual yet steady shift forms a rounded top. Volume during inverse saucers often mirror the bowl-like shape of prices during a saucer - volume, which was high during the previous trend, decreases as expectations shift and traders become indecisive. Volume then increases as the new trend is established.

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RELATED FAQS
  1. How are Saucer patterns interpreted by analysts and traders?

    Read about saucer patterns, when they form, how traders and analysts interpret them, and why they can be more difficult to ... Read Answer >>
  2. How effective is creating trade entries after spotting a Saucer pattern?

    Understand the basics of the formation and interpretation of the saucer pattern and why it is a useful tool for the creation ... Read Answer >>
  3. How do I build a profitable strategy when spotting a Saucer pattern?

    Understand the basics of the saucer pattern and how it is used to create a profitable trade strategy including formation, ... Read Answer >>
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