Rounding Bottom Pattern

The Rounding Bottom Pattern displays a complete trend reversal with an initial downtrend, followed by consolidation and later a significant upswing.

What is the Rounding bottom pattern?

A Rounding bottom pattern is a bullish reversal pattern that is quite often visible during bear market bottoms. This pattern clearly reflects the exhausted sellers after a significant downfall, after which the buyers regain trend control to trigger a recovery rally.

How to identify Rounding bottom patterns, and what does it implies?

The technical chart represents a typical U-shaped recovery. Furthermore, the pattern consists of three phases, i.e., downtrend, accumulation, and recovery. Following the downfall, which significantly discounts an asset’s value, attracts potential buyers to enter at a cheaper rate.

Thus, a prevailing downtrend sentiment gradually undermined by replenished bullish momentum creates an accumulation phase. Furthermore, the buyers eventually regain trend control and initiate a recovery rally.

How to trade?

The range resistance breakout from the accumulation phase is one of the best entry opportunities in a rounding bottom pattern. During this phase, the price usually consolidates with a short-range or rectangular chart pattern. Thus, a bullish breakout from the range’s resistance level would signal an upcoming recovery.

Anyway, the traders would get more entry opportunities during the recovery rally with occasional pullbacks and resistance breakouts.

Target:

In theory, the recovery rally should reach the points from where the downtrend started. However, the traders can book early profits at an important chart level as per their risk appetite.

Example:

The WAVES/USDT pair showcase a round bounding bottom pattern with its base support at $11.8 and the range resistance at $19. A bullish breakout from this barrier drove the altcoin 80% higher to hit $34.8.

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Disclaimer

From the past 5 years I am working in Journalism. I follow the Blockchain & Cryptocurrency from last 3 years. I have written on a variety of different topics including fashion, beauty, entertainment, and finance. Reach out to me at brian (at) coingape.com

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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