What is Rounding Bottom Pattern?
What is Rounding Bottom Pattern?
Round bottom can be identified when the price changes graphically form the shape of a "U" on charts. It is also called a saucer bottom pattern. It shows potential reversal in price movements. It shows a very slow and gradual turn from down to sideways to up. The longer it stays the longer the more possibility it gives for reversal.
How does Rounding Bottom Pattern Work?
Rounding Bottom Pattern can be divided into three phases:
1. Declining Phase
The decline phase indicates the excessive supply which leads to the price decline.
2. Sideways Phase
After the excessive supply and price decline their is nor demand or supply. Which leads to sideways phase. Usually the prices in this phase will trade flat which means price movement will be very less here with the volume .
3. Recovering Phase
Here in Recovering phase demand start to rise again. Due to excessive demand the price starts to recover.
Above Chart Example:
Here you can see the Bitcoin chart at 1 Day Time frame. It is forming the same Rounding Bottom Pattern. You can see the price price declining in the first phase of the pattern with good volumes.
After that we can also see the sideways phase where the price did not move much.
And finally last phase the prices start to recover again. Here traders can enter in long position after the prices breakout the resistance.
Conclusion:
Hence, Rounding Bottom Pattern is a rare long term reversal pattern to identify the end of a downtrend and the beginning of a potential uptrend.
Disclaimer:
This is just an educational post never trade just any pattern. And please do your research before taking any trades.
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