# Rounded Top Chart Pattern

The rounded top and bottom are reversal patterns which identify the completion of the trend and indicate a possible reversal point on price chart.

### Rounded Top :

This is also referred as “inverse saucer” as it resembles an inverted “U” image.

The pattern signals that the existing uptrend is about to finish and the possibility of a downtrend to commence.

This creates an opportunity to go short.

### How do we identify a rounded top pattern?

The chart below is an illustration.

Number 1: Uptrend

Number 2: Rounded top

Number 3: Neckline

The pattern occurs when the price goes upwards and stabilizes for a long period which gives rise to the rounded top.

Sooner or later, it falls back down below the neckline of the stabilized area.

### How do we trade the rounded top?

Observe the neckline marked on the illustration chart below.

As soon as the price breaks through and a candle closes below the neckline, short trading can be done. Enter the market with a sell order.

When the price trades beyond this point, there is less chance of this pattern’s functionality. It’s better to exit the market.

Profit target: Measure the height of the actual pattern and extending that distance down from the neckline.

Number 1: Uptrend

Number 2: Rounded top

Number 3: Neckline

Number 4: Height of pattern

Number 5: Same distance away from neckline as number_4

1 Long entry

2 Stop loss

### Nut Shell

An overview of the lesson discussed so far….

• The rounded top is reversal patterns which identify the completion of the trend and indicate a possible reversal point on price chart.
• The rounded top signals that the existing uptrend is about to finish and the possibility of a downtrend to commence. It resembles an inverted “U” image.
• Initially, A patterns move in one direction. Then the stabilization of price takes place. There is a price breakout of the neckline in the opposite direction.
• Enter the market when the neckline of the pattern is broken. Look for candle closes below (for rounded top) the neckline.
• The stop loss is placed above the neckline when trading the rounded top .
• For profit target, the measurement taken involves height of the actual pattern and extending that distance from the break of the neckline.