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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.


rounding bottoms

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.


round bottom

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.
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