Rounding Bottom
Rounding bottom is a chart pattern that is used in technical analysis to identify potential reversals in a downward trend. It is characterized by a series of lower highs and lower lows that form a U-shape, or a rounded bottom. The pattern is considered to be a bullish reversal pattern, as it signals that the downward trend may be coming to an end and that the price may be ready to move higher.
History of the Term
The term “rounding bottom” was first used by technical analyst Richard Schabacker in his 1932 book, Technical Analysis and Stock Market Profits. Schabacker was one of the first to recognize the importance of chart patterns in predicting future price movements. He identified the rounding bottom as a potential reversal pattern and noted that it could be used to identify potential buying opportunities. Since then, the pattern has become a widely used tool in technical analysis.
Comparison Table
| Pattern | Description |
|---|---|
| Rounding Bottom | Series of lower highs and lower lows that form a U-shape, or a rounded bottom. |
| Head and Shoulders | Series of three peaks, with the middle peak being the highest. |
| Double Bottom | Series of two lows, with the second low being higher than the first. |
| Triple Bottom | Series of three lows, with the second and third lows being higher than the first. |
Summary
Rounding bottom is a chart pattern that is used in technical analysis to identify potential reversals in a downward trend. It is characterized by a series of lower highs and lower lows that form a U-shape, or a rounded bottom. The pattern is considered to be a bullish reversal pattern, as it signals that the downward trend may be coming to an end and that the price may be ready to move higher. For more information about this term, you can visit websites such as Investopedia, TradingView, and StockCharts.
See Also
- Head and Shoulders
- Double Bottom
- Triple Bottom
- Cup and Handle
- Flag and Pennant
- Rising Wedge
- Falling Wedge
- Symmetrical Triangle
- Ascending Triangle
- Descending Triangle
