Reversal Patterns 4 : Rounding Bottom

The rounding bottom is a long-term reversal pattern that signals a shift from a downtrend to an uptrend. The pattern resembles the cup and handle pattern but, without the handle. Volume is one of the most important confirming measures for this pattern where volume should be high at the initial peak (or start of the pattern) and weaken as the price movement heads toward the low. As the price moves away from the low to the price level set by the initial peak, volume should be rising. The way in which the price moves from peak to low and from low to second peak may cause some confusion as the long-term nature of the pattern can display several different price movements. The price movement does not necessarily move in a straight line but will often have many ups and downs. What is important is the general direction of the stock price.

Example of a rounding bottom pattern:

You may like these posts:

  1. Reversal Patterns 1 : Double tops and double bottoms
  2. Reversal Patterns 2 : Head and Shoulders
  3. A study of chart patterns

3 Responses to “Reversal Patterns 4 : Rounding Bottom”

roland

February 8, 2013 at 5:10 pm

I have not gone through all your message. But whatever I have gone through, the Information is simple and clear. For a layman like me this is of immense help. Only recently I started getting familiar with the charts.

Sunil

February 12, 2013 at 1:08 pm

Hello Victor,

Great lessons on Technical analysis.. ..Please help us with some thing similar for Fundamental analysis .. Fundamental ratios ,indicators their applicability ( how to use) while investing…
look forward for your reply

Sunil

April 8, 2013 at 8:04 pm

Hello Victor,

Thank you for not responding to my earlier comment. Its been a month plus and great lessons on fundamentals too…. Thanks again….wish you all the best.

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