Let’s analyse the Rounding Top Pattern, another Pattern of the Technical Analysis. The Rounding Top is a Reversal Pattern. Let’s analyse it point by point. Remember, that in order to understand better the Patterns of the technical analysis, you should know how Trend Lines and Resistances/Supprots work (For this reason we suggest you to read: What is a Trend and what are Trend Lines; Resistance and Supports).
Features of the Rounding Top Pattern
– When it occurs: Pattern that occurs in an Uptrend.
– The first part of the Pattern is a rise that leads to the formation of the Highest High of the whole Pattern.
– The second part of the Pattern is a decline, and should be long as the first part of the Pattern.
– Breakout: occurs when prices break below (Go from above to below) the Support of the Pattern; Support that you plot starting from the Lowest Low that there is during the Pattern.
– Volumes: The volumes of exchanges should be irregular, undefined (Not as the Rounding Bottom).
– Duration: the duration of the Pattern can vary from several weeks up to several months, because it is a long-term Pattern.
– Target Price: there is not a method to calculate it, but you should look at the length of the Previous Trend and the length and width of the Pattern itself. It can happen that the Price Target equals the 100% of the length of the Previous Trend, or even more in some cases.