Rounding Bottom
A rounding bottom (also called saucer bottom) is a long-term reversal pattern where price gradually transitions from downtrend to uptrend, forming a U-shape. It takes weeks to months to form.
Understanding the Concept
This pattern shows slow accumulation. Unlike V-shaped reversals, rounding bottoms indicate patient buying over time. Smart money is accumulating while retail gives up. The gradual curve means sentiment is slowly shifting from bearish to bullish. Volume typically decreases during the bottom and increases on the right side as price rises. The breakout above the pattern's starting resistance confirms the reversal. Because it takes so long to form, it's one of the more reliable patterns for longer-term investors.
Real-World Example
Amazon stock falls from $150 to $100 over three months, then slowly forms a curved bottom over four months, and breaks back above $150. The rounding bottom suggests a major trend reversal—new highs coming.
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