• 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.
Hi there - really liking the explanation - although I have a question on neckline - how do you decide where to place the neckline here ? What is the definition of neckline? Thanks
johntradingwick
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@kartikgulati, Hi, there is no fixed rule for the neckline but in my opinion, the neckline is made using the reaction lows, the point to which the price is constantly tapping. It is purely subjective and different traders may have slight differences in making the neckline. I hope that helps. :)
sputhran92
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Please share pdf with me too. Thank you great job!
I am not sure if you are Indian or not so atleast from my timezone, Good morning .
1 request and 1 question
if you have these information like kartik said in pdf form , can I get it ?
And
if say the movement of nifty metal and tata steel is related ..
then what will be reliance related to , considering it contributes 9% to the nifty , will it be nifty 50 or nifty energy ?
thanks mate.
p.s Its good to have someone you can actually talk to instead of just browsing youtube and internet for random information
johntradingwick
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@Ameya_Devkar, Good morning, I am also from India. :)
Yes, I have made PDFs of my threads which I share for free(I'll message you the details, TV doesn't allow sharing any information in the comments). Regarding the index issue, as far as I know, Reliance is more closely related to Nifty 50 since it is the 2nd most important constituent of the same. At least, I take consider the direction of Nifty 50 if I want to trade in Reliance(if that's what you were asking). Hope that helps.
Ameya_Devkar
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yes , thats exactly what I was getting at . Thank you