Rounding Bottom Pattern
Learn to recognize and trade a rounding bottom pattern through interactive charts.
What is a rounding bottom pattern?
A rounding bottom is a long-term trend reversal pattern, whereby a downtrend turns into an uptrend. It resembles a flat extended 'U' and is also called a 'saucer'.
- Cheniere Energy (LNG) Rounding Bottom stocks
- Best Buy (BBY) Rounding Bottom stocks
- Gold (GOLD) Rounding Bottom metals
- USDCHF Rounding Bottom forex
- AUDGBP Rounding Bottom forex
- GBPUSD Rounding Bottom forex
Rounding bottom duration
A rounding bottom can happen in as little as 7 weeks, but usually occurs over months, and sometimes over a year. This is why it is easiest to spot on weekly charts.
Rounding bottom characteristics
A rounding bottom has a flat and extended 'U' shape. Look for a 12% to 20% retracement from peak to trough, milder than a cup with handle pattern. The pattern's base should take weeks to form and be relatively flat. However, a capitulation event may create a selling climax. The pattern should be relatively symmetrical, but need not be a mirror image of itself.
Ideally, trading volumes should mirror the pattern: declining as the price falls, before stabilizing as the base forms and rising as the price advances in the final stage of the pattern. However, it's important that the rise in price be accompanied by rising volumes.
Rounding bottom trading tips
The pattern completes once the price breaks above the price level that marked the start of the decline. Open a long position at that time. As this pattern is a long term one, the strength of the advance should provide validation.
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