Rounding Top Pattern
The rounded top pattern is a pricing model used in technical analysis. This is determined by the daily price movements, especially the peaks that form a downward curve on the chart. Technical analysis of price information suggests that a rounded top may form at the end of an extended uptrend and that this price pattern may indicate a reversal of long-term price movement. The pattern can develop over days, weeks, months, or even years, with longer deadlines to completion, predicting longer trend changes.
After the top of the rounding, traders can also look at the volume, which usually increases as the price on the chart rises and decreases with a downtrend. At the rounded top, the line of the curve following the highs of the peak forms an inverted U shape. In this pattern, the stock price will rise to a new high and then steadily drop from the resistance level, forming a rounded peak. Volumes usually increase as the price rises and may experience another upward trend during the sell phase.
Usually, a rounded tip is also a climbing perspective for safety which shows a bearish future. However, investors should be cautious when following a round high, as support could appear in a stock price, leading to more rounded peaks in the form of a double or triple top.