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Roundingbottom

Rounding Bottom patternHey everyone! 👋 Today we are going to share a quick write-up about the “Rounding bottom” formation, along with a few examples that may help you solidify your understanding of this chart pattern. Please remember this is an educational post to help all of our members better understand concepts used in trading or investing. This in no way promotes a particular style of trading! The post will shed some light on the following topics: ➡ Basics and identification of the pattern ➡ Components ➡ Important aspects What is a Rounding bottom pattern? • A rounding bottom is a bullish reversal pattern that resembles the shape of the "U". • Rounding bottom pattern occur at the end of long downtrends and indicate a potential reversal. • The pattern is also referred to as a saucer bottom due to its resemblance to a saucer. • Although, the volume and price move in sync but in practice, this can vary widely. • When the price moves above the neckline, it indicates strength and suggests that the stock may begin a new uptrend. Components of a Cup and Handle pattern: A rounding bottom pattern can be divided into three main parts. • Decline • Formation of the base • Advance Important aspects: 1. Prior Trend: Since it is a bullish reversal pattern, the prior trend must be a downtrend. The low of a rounding bottom should ideally mark a new low or reaction low. The stock may trade sideways or flat for a long duration before the formation of the pattern. 2. Decline: The sell-off or decline that leads to the formation of the low, can take a variety of forms. Sometimes, the down move has many whipsaws while other times, the stock may just trade flat. 3. Low: In general, the pattern resembles a "U" shaped bottom. However, it can also resemble a "V" or a "W," but the low should not be too sharp. In addition to this, there is always a possibility of a new low due to a selling climax. 4. Advance: In general, the formation of the right half of the pattern should take about the same amount of time as the left half. This means that the up move off the lows should take about the same time as the down move. Moreover, the advance shouldn't be too sharp, or else there is a possibility of breakout failure. 5. Breakout: The pattern is confirmed once the price breaks and sustains above the neckline. The price may return to the neckline to test for the demand before continuing upwards. 6. Volume: In general, the volume levels should be ➡ High during the down move ➡ Low during the formation of the base ➡ Rising during the up move However, these are only guidelines and should not necessarily be taken at face value. 7. Target: Using the measurement objective, the target comes out to be equal to the depth of the base. It can be measured by calculating the distance between the bottom of the base and the neckline. 8. Stop-loss: Ideally, the stop loss is placed at the lowest point of the base. But if the price oscillated up and down a number of times near the neckline, the stop-loss can also be placed below the most recent swing low. Exhibit: Rounding bottom pattern with a failed breakout Thanks for reading! As we mentioned before, this isn't trading advice, but rather information about a tool that many traders use. Hope this was helpful! See you all next week. 🙂 – Team TradingView Feel free to check us out on Instagram and YouTube for more awesome content! 💘
Education
by TradingView
9
Rounding Bottom PatternThe Rounding Bottom is a long-term reversal pattern that is best suited for weekly charts. It is also referred to as a saucer bottom, and represents a long consolidation period that turns from a bearish bias to a bullish bias. 1. Decline: The first portion of the rounding bottom is the decline that leads to the low of the pattern. 2. Low: The low of the rounding bottom can resemble a “V” or "U" bottom, but should not be too sharp and should take a few weeks to form. 3. Advance: The advance off of the lows forms the right half of the pattern and should take about the same amount of time as the prior decline. 4. Breakout: Bullish confirmation comes when the pattern breaks above the reaction high that marked the beginning of the decline at the start of the pattern. To trade this pattern look for the neckline that is marked on the chart. Once the price breaks through and a candle closes above the neckline, you can then enter the market with a buy order. 5. Volume: Volume levels are not too important on the decline, but there should be an increase in volume on the advance and preferably on the breakout. 6. Target: Add the height of the rounded bottom to the breakout point for an estimated upside target. 7. Stop Loss: The stop loss is placed below the neckline of the pattern.When the price trades below this point, there is less chance of this pattern’s functionality. It’s better to exit the market. The rounded bottom are reversal patterns which identify the completion of the trend and indicate a possible reversal point on price chart. The rounded bottom signals that the existing downtrend is about to finish and the possibility of an uptrend to commence. It resembles a clear “U” image.
NSE:AGARINDEducation
by MandeepSinghKohli
7
Rounding bottom breakout pattern Learning. Educational purposeThis is a chart of indiamart, here i am sharing to learn some logics of rounding bottom along with reasons, targets and stop loss. Here price has formed rounding bottom, and now it has given breakout along with good intensity of volume at same breakout candle, with supporting views by rsi above 60 at breakout, along with macd running positive crossover and now above zero line. if price retest the neckline of rounding bottom and rises again then probabilities of win are increased. here stop loss should be bottom of rounding pattern and targets should be double of total depth of rounding bottom to neckline, so our risk rewards ratio would be at least 1:2 price challenging upper bollinger band supporting indicators Disclaimer I am not sebi registered analyst My studies are for educational purpose only Consult your financial advisor before trading or investing
NSE:INDIAMARTEducation
by RK_Chaarts
Phillips Carbon - Positional - a mistake I corrected Sharing a mistake I made and how I corrected it. On Weekly chart, I saw a nice rounding botton pattern and stock close to ATH with a BO candle of 26 July 2021. I also saw volume expansion on that day as well as expansion since the candle of 18 January 2021. I went long at approx. 270. Although RSI was above 60, what I failed to see was RSI High was flat. And price was making a high with flat RSI. That was my first mistake. The second mistake was my decision was based on upward slope of MA line and entry price was roughly 25% away from 30 Weekly MA. The third mistake I made was I have a rule where I add 20-25% corpus on BO with Volumes and slowly add the rest on retracement based on price action. In this case, I added 75% at one go. I also didn't see the Daily chart for entry. A lower timeframe is recommended as ideal for entry, so for someone like me who invests positionally basis Weekly charts, I should have taken cognizance of the price action on Daily. We don't know what will happen in future. Nifty 50 is on steroids and maybe price will go up or it may retrace and form a cup and handle pattern which is a better confirmation in terms of probability. At my entry price my risk was way too high to add 75% at one go (If I had added only 20-25% this would be a safe trade). And as investors and traders, we have to manage risk and protect capital. You may wonder why did I do this? It was my mind that was excited and momentarily I saw a prominent site where the stock had made the day's high. I make a conscious effort to not follow the calls given by research agencies or stock news sites. There is a reason behind this- news comes later, charts inform us earlier. I exited a part at cost and remain invested only 25% of my corpus for this stock. If stock retraces to the area of better Risk Reward zone, I will add more. Disl: This is not an investment or trading buy / sell advice. The purpose of this is educational- to share knowledge and learn from the community members. Please consult your investment advisor for any investment related advice.
PEducation
by culturalDealer79974
3
Trading Patterns 101 - The Rounding Bottom patternWhat Is a Rounding Bottom? • A rounding bottom is a chart pattern that graphically forms the shape of a "U". • Rounding bottoms are found at the end of extended downward trends and signify a reversal • It is also referred to as a saucer bottom • Ideally, volume and price will move in tandem. Parts of a Rounding Bottom: A rounding bottom chart can be divided into several main areas. • Decline • Consolidation • Advance Important aspects: 1. Prior Trend: In order to be a reversal pattern, there must be a prior trend to reverse. Ideally, the low of a rounding bottom will mark a new low or reaction low. The stock may trade flat before forming the pattern. 2. Decline: The first portion of the rounding bottom is the decline that leads to the low of the pattern. This decline can take on different forms: some are quite jagged with a number of reaction highs and lows, while others trade lower in a more linear fashion. 3. Low: The low of the rounding bottom can resemble a “V” bottom, but should not be too sharp. Because prices are in a long-term decline, the possibility of a selling climax exists that could create a lower spike. 4. Advance: The advance off of the lows forms the right half of the pattern and should take about the same amount of time as the prior decline. If the advance is too sharp, then the validity of a rounding bottom may be in question. 5. Breakout: Bullish confirmation comes when the pattern breaks above the reaction high that marked the beginning of the decline at the start of the pattern. 6. Volume: In an ideal pattern, volume levels will track the shape of the rounding bottom: high at the beginning of the decline, low at the end of the decline, and rising during the advance. Volume levels are not too important on the decline, but there should be an increase in volume on the advance and preferably on the breakout. Potential 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!
NSE:RELIANCEEducation
by johntradingwick
103
Multiple patterns on Multi Time Frames - DHANUKADHANUKA has shown multiple chart patterns on different time frames. Strong results posted in the last two quarters. Monthly: Rounding Bottom Cup & Handle Pattern Both these patterns are showing highest upside potential of 1550 levels. Weekly: Pole Flag Pole Flag has a potential to reach 1330 levels. Daily : Triangle pattern Triangle breakout shows signs to reach 980 levels. This stock has taken strong support 700 levels, expecting this to retest 200DMA which is also close to that level. Note: Keep this stock on radar..
NSE:DHANUKAEducation
by VijayBabuA
1
Rarest of Rare Double Rounding Bottom with Break n Retest PattrnNSE:GMRINFRA INVESTMENT IDEA // MULTI-BAGGER DISCLOSURE & DISCLAIMER ➢ AT CURRENT PRICE LEVELS THIS IDEA IS FOR EDUCATIONAL PURPOSE ONLY. DEPENDING ON THE FURTHER PRICE MOVEMENT IN COMING WEEKS OR MONTHS, I MIGHT POST A BUY RECOMMENDATION, ONCE IT FULLY MEETS MY CRITERIA. YOU CAN FOLLOW ME FOR ANY SUCH POST IN FUTURE. ➢ ALL MY IDEAS AND RECOMMENDATIONS ARE SUBJECT TO MARKET CONDITIONS. PLEASE TRADE / INVEST / FOLLOW / COPY THE IDEA AT YOUR OWN RISK. I DO NOT TAKE RESPONSIBILITY OF YOUR LOSS OR CREDIT FOR YOUR PROFIT. ➢ I MAY OR MAY NOT HAVE ANY PERSONAL INVESTMENTS IN THIS SCRIPT. ➢ AS THE IDEA IS FOR LONG TERM INVESTMENT AND NOT FOR TRADING. THE IDEA BASED ON BOTH STRONG TECHNICAL & FUNDAMENTAL (QUANTITATIVE) ANALYSIS OF THE STOCK. ➢ ROUNDING BOTTOM STOCKS TEND TO GIVE FALSE BREAKOUTS AT DIFFERENT LEVEL AS THEY TRY TO CROSS MULTIPLE RESISTANCES AT MULTIPLE INSTANCES. THOUGH THE RISK REWARD IS VERY HIGH FOR THESE PATTERNS, IT’S VERY IMPORTANT TO FOLLOW STRICT PRICE LEVELS FOR ENTRY AND EXITS. So let’s begin.... What is a rounding bottom pattern and how it works? In general, as the name suggests, when the stock chart has a curve or rounding shape as marked in the above chart it can be called Rounding Bottom Pattern. This pattern can occur anywhere in a chart and on any type of chart (Intraday, Daily, Weekly, Monthly etc). Though its not simple to use with a thumb rule per say, but an experienced technical trader can easily identify and use it effectively for his trading after several confirmations and combinations, such as price volume breakouts, DEMA crossovers or several other technical indicators. How to identify a multi-bagger with rounding bottom pattern? Just for the beginners, Multi-baggers are generally referred to investment grade stocks that gives returns that are multiple times of the buying price. So if you invest in a stock Rs. 100,000 in XYZ stock and over the period of 2-3 years it is worth of 500,000; The XYZ stock can be called as 5X bagger. So now let’s see what is a Double Rounding Bottom Multi Bagger (DRBMB) with a retest. An DRBMB stock must meet certain criteria, which I am listing as below: (Please select and refer the monthly chart of the stock with full history available) - The stock should have a history of at least 10 years. - In the past, stock price must have performed at least 5 times of the current price levels and fallen from that peak gradually over months / years. - Stock must have made 2 rounding bottom patterns in the time frame of 2-3 years each. - Consolidation breakout as shown in the chart herewith. - Confirmation on fundamentals (as below) Do I need to check Fundamentals of company? - Further to above confirmations, above chart pattern must be backed by the quantitative and qualitative fundamentals of the company. For example, once the consolidation breakout happens the company should start posting positive quarterly earnings every quarter consistently for 2-3 years minimum. - Company should continuously doing reforms such as debt reductions, bagging new orders, promoters releasing their pledging and buying back more stake in the company etc. (If you are not confident of doing the above yourself, for both the above confirmations, you can watch news channels (which I don’t recommend otherwise) and follow the renowned fundamental analysts who will definitely post their views on the stock time to time as it progresses.) Why GMR INFRA? In my view, GMR INFRA is a potential DRBMB which can qualify all the above criteria and can become a wealth creator over the period of 3-5 years. When should I start and stop tracking? Easiest way is to follow me, as I will be posting updates on this post so you can be well aware about the entry point and exit points. Other option is to follow the below quick price level summary by putting level alerts: LTI Educational Call // Dated: 21 / 09 / 2020 NSE: GMRINFRA LTP: 23.95 ENTRY: When Monthly closing is above 30.00 EXIT (STOP LOSS): When Monthly closing is below 25.00 (@20%) (If you need accurate SL / Exit when MONTHLY 5 EMA crosses below MONTHLY 26 EMA) TARGET 1: 80.00 (3x times of Entry Price within in 1 Year) TARGET 2: 120.00 (3x times of Entry Price within 2 Years) TARGET 3: Follow me... :-) Are there any references or examples of such patterns? Check out the stock TANLA SOLUTIONS (NSE: TANLA) for the similar chart pattern. Would there be any opportunities of short term / swing trading in this stock? Yes, once the stock is closed above 200 Monthly EMA there will be ample opportunities of swing trading and short term trading as well. HAPPY INVESTMENTS & TRADING!!
NSE:GMRAIRPORTEducation
by Amit_Padishalwar
4