johntradingwick

Trading Patterns 101 - The Rounding Top pattern

Education
OANDA:EURUSD   Euro / U.S. Dollar
What is a Rounding Top?

• A rounding top is a chart pattern that graphically forms the shape of an "Inverted U".
• Rounding Tops are found at the end of an uptrend trend and signify a reversal
• It is also referred to as an inverted saucer.
• Ideally, volume and price will move in tandem.

Parts of a Rounding Top:

A rounding Top chart can be divided into several main areas:
• Advance
• Consolidation
• Decline

Important aspects:
1. Prior Trend: There must be a prior uptrend before the formation of the top. The stock may trade flat before forming the pattern.

2. Advance: The first portion of the rounding top is the advance that leads to the high of the pattern. This rise can take on different forms: some are quite jagged with a number of reaction highs and lows, while others trade in a more linear fashion.

3. High: The high of the rounding top can resemble an “Inverted V” top, but should not be too sharp. Because prices are in an uptrend, the possibility of a buying climax and upthrust exists that could create a higher spike.

4. Decline: The decline from the highs forms the right half of the pattern and should take about the same amount of time as the prior advance.

5. Breakdown: Bearish confirmation comes when the pattern breaks down from the reaction lows and ultimately, the neckline.

6. Volume: In an ideal pattern, volume levels will track the shape of an inverted rounding top: high at the beginning of the advance, low at the end of the advance/consolidation, and rising during the decline.

Example:

Like always, if anyone is interested in getting a PDF version of this thread, then you can message me, I'll provide it.

Happy learning. Cheers!

Rajat Kumar Singh,
B.Tech (Delhi Technological University)
Global Community Manager, TradingView

✅ Telegram: t.me/johntradingwick
✅ Blog: tradingwick.in/
✅ Rounding Top pattern: tradingwick.in/chart-patterns/rounding-top
Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.