Then buy your shares as the stock recovers, proving its mettle on the battleground of the market. There's a lot to learn in order to spot sound price bases from faulty look-alikes. But don't feel discouraged. Traders master this stuff by examining hundreds, even thousands, of stock charts in times of rising, falling and flat markets. You can do the same by searching for bullish price bases in the dozens of stock charts that appear in Investor's Business Daily each day.
Shorter bases tend to fail.
And some price bases can take a year or more to complete. Such long bases usually coincide with bear markets or severe corrections within market sectors. Steeper declines suggest weakness. The downward phase, or left side, of the cup should take at least a couple weeks. You want the correction to really scare out weak shareholders.