The Saucer is closely related to the line formation, but has its own characteristics and may form much more quickly. Prices forming a saucer gradually curve upward (in the case of a bottom formation) or downward (in the case of a top).The cu rve, of course, tips off the probable direction of the major move to come,. There's another picturesque feature.A great majority of saucers (not quite all) develop a handle or platform, consisting of either a horizontal or slanted line, before the main move gets underway. Perhaps the formation should be called a sauce pan, instead.
How it happens
As with all valid chart patterns, these stem from a typical market psychology in certain situations. For example, the line bottom, or "long base," occurs when the supply of and demand for a stock are in a very stable balance. And there is little trading in the stock, because there has been no change in its outlook, for better or worse, and no news to draw attention to it. Stockholders see little reason to at the current price level, and potential buyers see little reason to buy, especially if they must bid the price up to smoke out any sellers. A break out from this long base on increased volume probably means that something is brewing, a new product, a jump in sales or profits, a merger and this rumour or fact has produced an unusual demand for the the stock. Incidentally such breakouts are rarely accompanied by company announcements, those come later. Frequently, "insiders" have been quietly adding to their holdings during the "long base" period.At any rate, someone in the know is buying, and sooner or later, the facts become known to more and more people, and the price begins to take off.
Volume
A tidy characteristics of the line and saucers formations is that the volume portion of the chart tends to follow the price. Throughout a line, or base formation, volume is exceptionally low until the break out into new high ground. Even then, trading may be relatively light at the outset, but it soon expands dramatically.
In a typical Saucer, on the other hand, trading slowly diminishes to a low then gradually picks up as prices curve to complete the pattern or move to the platform stage. Volume thus has formed a Saucer itself. It may become quite active at the start of the platform and again at the end, as the stock breaks out of the platform area.
I did have images in the file, I`ll have to find out about that.
