Rounding Top and Bottom
Besides the spiking prices associated with head and shoulders and gaps, some trends are found in a softer rounding effect. The rounding top or bottom marks a potential reversal, but without the clear spiking price points expected in so many types of signals.
A rounding top is most convincing as a signal of reversal when it “rounds” higher than resistance. In such a case, you expect to see price retreat to the downside in a new bear market. An example is found in Figure 5.5.
Figure 5.5 Rounding top (Chart courtesy of StockCharts.com)
Unlike the heads and shoulders with its fast-moving and spiking prices, the rounding ...
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