ROUNDING TOP PATTERN

How the Rounding top pattern forms ?

In the rounding top pattern, the price of the security will rise to a higher high, then slowly decreases from a resistance level to form the rounding top. 

Volumes will usually be the highest when the prises are rising and may experience another high on the downtrend during the sell off phase. 

A rounding top will also represent a bearish future outlook for the price. However, one should be careful when following a rounding top as support for the stock price can occur causing several rounding tops to follow in a double top or triple top pattern.

A rounding top is a price pattern used in technical analysis It is identified by daily stock price movements. 

Technical analysis of price action suggests that a rounding top forms at the end of an upward trend and that this price pattern may indicate a price reversal in the long-term price action. 

The pattern can develop over several weeks, months or even years, with longer time frames to completion forecasting longer changes in trend. 

It may appear like a double top or triple top pattern sometimes. The small candles or doji can also forms at the top of the pattern. 

The main point of identifying the pattern is to anticipate a sudden change in trend from uptrend to downtrend. 

Identifying this kind of a change in trend can allow investors to take profits of long side and protect themselves from buying into an unfavorable market and to prepare the short sell. 

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