The principles of price pattern construction and interpretation can be applied to any time frame, from 1-minute bars all the way through to monthly or even annual charts. However, the significance of a price formation or pattern is a direct function of its size and depth.

Thus, a pattern that shows up on a monthly chart is likely to be far more significant than one on an intraday chart, and so forth. It is just as important to build a strong base from which prices can rise as it is to build a large, strong, deep foundation upon which to construct a skyscraper.

In the case of financial market prices, the foundation is an accumulation pattern that represents an area of indecisive combat between buyers and sellers. The term accumulation is used because market bottoms always occur when the news is bad. Such an environment stimulates sales by uninformed investors who were not expecting developments to improve.

During an accumulation phase, more sophisticated investors and professionals would be positioning or accumulating the asset concerned in anticipation of improved conditions 6 to 9 months ahead. During this period, it is moving from weak, uninformed traders or investors to strong and knowledgeable hands. The longer the period of accumulation, the greater the amount of a security that moves from weak into strong hands and the larger is the base from which prices can rise.