Reversal Chart Pattern: Rounding Bottom
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 handle 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).
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 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.
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.
The rounding bottom pattern gives an entry signal to buy when the price breaks above the resistance level formed by the peak that marks the start of this pattern. At this point the descending trend is considered to have reversed direction into an ascending trend by forming a rounding bottom pattern.
To get the price projection of the occurrence of this rounding bottom pattern is different from the reversal pattern of other trends. Not the depth between the resistance level and the lowest level of the bowl (which is the support), but there is no price projection. If you want to precede this rounding bottom pattern by taking a buy position after this pattern forms the path,, certainly not recommended as there is no confirmation level yet.