Reversal Chart Pattern: Rounding Bottom

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Reversal Chart Pattern: Rounding Bottom

Chart Patterns Round Bottoms

Chart Patterns Round Bottoms

The Rounding Bottom or Downside Pattern also called the bottom of the bowl, is a long-term reversal pattern of reversal that rarely appears or is sometimes seen on chart at large or old timeframes. This rounding bottom pattern usually takes several months to several years to form. The length of time required to do rounding motion (rotate) makes it somewhat difficult to recognize. It looks very much like the cup (cup) in the cup and handles pattern. However, unlike the cup and handle pattern, the rounding bottom usually appears at the end of the downtrend or during the protracted sideways market (for a long time).

Chart Patterns Round Bottoms

Chart Patterns Round Bottoms

In the rounding bottom pattern, the rate of decline in prices slows down and eventually leads up slowly before accelerating gently. These price movements can usually go up and down with the shallower lower level initially followed by higher high after moving up. The time is taken to form a half pattern on the left, ie a slowing decline should be similar to the time it takes to form a slowly rising right beak.

Chart Patterns Round Bottoms

Chart Patterns Round Bottoms

The volume that accompanies this pattern is important in confirming this rounding bottom pattern. Volume should be high at the beginning of the pattern and become weaker as the decline in prices slows to the lowest level. As soon as the price reverses and starts moving away from the low level, the volume should also increase.

Chart Patterns Round Bottoms

Chart Patterns Round Bottoms

Entry Signal

The bottom rounding pattern gives an incoming signal to buy. That is when the price breaks above the resistance level formed by the peak which marks the beginning of this pattern. At this point, the downward trend is considered to have turned towards an uptrend. And then it will form a rounding down pattern.

Price projection

To get the price projection the rounding of the bottom pattern is different from other trend reversal patterns. Not the depth between the resistance level and the bowl’s lowest level (which is support). However, there is no price projection. If you want to overtake the bottom rounding pattern by taking a buy position. That is after this pattern forms a path, it is of course not recommended because there is no confirmation level.

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