What Is a Rounding Top?
A rounding top is a price pattern used in technical analysis. It is identified by daily price movements, in particular the tops, which when graphed, form a downward sloping curve. Technical analysis of price information suggests that a rounding top may form at the end of an extended upward trend and that this price pattern may indicate a reversal in the long-term price movement.
The rounding top pattern can develop over several days, weeks, months, or even years, with longer time frames to completion forecasting longer changes in trend. It may be contrasted with a rounding bottom.
Understanding a Rounding Top
A rounding top pattern is similar to that of an inverse saucer pattern. It is also similar to, and may occur coincidentally with, a double top or triple top price pattern. The main point of recognizing the rounding top pattern is to anticipate a significant change in trend from upward trending prices to downward trending prices. Recognizing this kind of a change can allow traders to take profits and protect themselves from buying into an unfavorable market, or strategize to make money from falling prices by short-selling.
A rounding top is a price pattern used in technical analysis. It is identified by daily price movements, in particular the tops, which when graphed, form a downward sloping curve. Technical analysis of price information suggests that a rounding top may form at the end of an extended upward trend and that this price pattern may indicate a reversal in the long-term price movement.
The rounding top pattern can develop over several days, weeks, months, or even years, with longer time frames to completion forecasting longer changes in trend. It may be contrasted with a rounding bottom.
Understanding a Rounding Top
A rounding top pattern is similar to that of an inverse saucer pattern. It is also similar to, and may occur coincidentally with, a double top or triple top price pattern. The main point of recognizing the rounding top pattern is to anticipate a significant change in trend from upward trending prices to downward trending prices. Recognizing this kind of a change can allow traders to take profits and protect themselves from buying into an unfavorable market, or strategize to make money from falling prices by short-selling.