(8) Takeover Or Merger Talks In Progress
It is one of the most surprising ways to find strong base formation in cup with handle chart pattern. Merger or acquisition is the beauty of corporate world. In business world, small or underperforming companies are often acquired by large & outperforming companies.
Sometimes, two companies with good business scenario get merged to face competitive markets. In such a situation, if the merger is in favor of investors then stock price of joint entity is likely to get a good boost.
If base formation in cup with handle pattern is formed in such a company then it is likely to be stronger in nature. You can buy shares of such entity for better returns.
However, you are advised to maintain a strict stop loss order at right levels. It will help you to prevent losses that may arise due to any untoward situation.
(9) Government Incentives Or Successful Promotional Activities In The Sector
It is one of the most shocking factors to identify strong base in cup and handle pattern. Government incentives can provide huge boost to the profit margins of a company or an entire sector.
These are usually provided to boost business activities in a struggling sector. If you have identified the formation of base in cup with handle pattern before or after official announcement then it could be a good signal for investors.
Additionally, if a company is getting huge response from its unique promotional activities then it could be beneficial for the investors too.
Base formation during such positive campaigns is quickly reflected in their share price. Thus, you should always track such activities during base formation.
- Strong Base Formation: Shutterstock