What is a Brobdingnagian Base?
One of my favorite technicians of all time is John Roque. John formerly worked as a technical analyst under George Soros at Soros Fund Management. He then left to help manage Key Square Capital, a Hedge Fund that Soros seeded with $2 billion. John Roque joined Twitter this past month and has been tweeting under the handle @daChartLife. He’s hit the ground running, sharing his charts and knowledge of financial markets. One of the things Roque talks about often is “Brobdingnagian Bases”. But what does the term even mean?
The word "Brobdingnagian" comes from Johnathan Swift's classic novel, Gulliver's Travels. It’s used to describe the human giants that come from the fictional land of Brobdingnag. In other words, the adjective describes something that is gigantic.
A base in technical analysis is when price moves sideways for a period of time. It's usually drawn on a chart as a horizontal or slightly rounded line. Bases typically indicate equilibrium between supply and demand. Significant price moves, up or down, only occur when supply and demand are out-of-balance (more buyers than sellers or vice versa). Typically, the longer this sideways price action continues for, the bigger the subsequent breakout move is. Another famous technician, Louise Yamada is known for coining the simple phrase below to help describe this concept.
"The bigger the base, the higher in space; the bigger the top, the bigger the drop"
-Louise Yamada
Below, are three tweets from Roque, where he talks about potential "Brobdingnagian Base" formations. He's trying to make the point that these are gigantic bases that could lead to massive breakouts.
It's undoubtedly an unusual way to describe it, and Roque seems to be very fond of using the term to describe long periods of sideways price action. He doesn't seem to be the only technician who describes lengthy bases this way. Here's a link to an old Seeking Alpha article written by Jeff Saut, of Raymond James, where he describes the sideways price action in the Dow Transportation Average as a "Brobdingnagian Base".
The term has unique origins and might seem a bit odd, but don't let it confuse you. At the end of the day, it simply means a gigantic base which will likely resolve in an explosive move higher or lower. To learn more about John Roque check out this article.