What is a rounding top?

A rounding top chart pattern is a bullish chart pattern. It will occur after a large uptrend. Eventually the stock will start t weaken and fall. This should make a round (bridge like) top. When the stock has fallen a good amount it will most likely reverse and start heading higher again.

In this pattern the stock started forming a top at around $23.50. Once it hit $16.50 it started coming up again and forming an uptrend.

volume You should see a spike in volume when the stock starts forming an uptrend again. It is very important to see large volume when the stock starts making an uptrend.

trading the pattern Some professional traders may decide to short the pattern when the top is formed. These traders should be prepared for any trend reversal that may occur. Other traders may choose to buy once the stock starts turning into an uptrend again.

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