Basing

In technical analysis, the term basing refers to a pattern of relative inactivity in a market. Basing occurs when few fluctuations in levels of positive and negative activity occur, resulting in rates remaining stable over a certain time frame.

In the case of stocks, basing often indicates that a stock is being consolidated. When a stock is under consolidation, the levels of supply and demand for that stock remain constant, with losses and gains balancing each other out. This may occur when a company has reached its full growth potential, or when a company stagnates with little growth or decline in its business.

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Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.