Introduction to Chart Patterns

Rounding Bottom

By March 17, 2016 December 1st, 2018 No Comments

Back to “Technical Analysis Guide”

Weekly Chart Pattern

Technical analysis uses stock charts and visible patterns to help analysts make educated predictions about whether a stock is about to increase or decrease in price. By gathering information about price points for a certain stock over a long period of time, certain patterns and shapes become visible, indicating volume, momentum, and trends in the stock’s personality. By learning to interpret patterns like the rounding bottom accurately, investors can have a good idea where the market is going to go before it moves..

Most analysts will agree that the rounding bottom is a long-term reversal pattern that takes more than a few days to form and get spotting on the charts. This means that it is most often used in the weekly charts instead of daily charts. You might also hear some analysts refer to it as a saucer bottom because of the way that the pattern seems to form the outline of a saucer on the charts. It’s important to note that this pattern often represents an extended consolidation period in which it stops demonstrating a bearish bias and turns to a bullish bias instead..

You might be thinking that the rounding bottom closely resembles the head and shoulders pattern but without readily identifiable shoulders, and you are right. The volume patterns of these two chart signals are very similar and can only be confirmed with a noticeable resistance breakout.