Rounding Top

AAA

DEFINITION of 'Rounding Top'

A chart pattern used in technical analysis which is identified by price movements that, when graphed, form the shape of an upside down "U". A rounding top may form at the end of an extended upward trend and indicates a reversal in the long-term price movement. The pattern can develop over several weeks, months or even years, and is considered a rare occurrence by many traders.

The chart below illustrates a rounding top.

Rounding Top

INVESTOPEDIA EXPLAINS 'Rounding Top'

This pattern is also described as an inverse saucer. A rounding top represents a sell signal to technical analysts. The initial upwards trend becomes exhausted as the demand for the stock dries up. The reversal to the downward slope of the rounding top indicates that demand has tapered off and a surplus supply is present, basically there are more sellers than buyers. A rounding top represents a bearish take on the stock.

RELATED TERMS
  1. Trend Analysis

    An aspect of technical analysis that tries to predict the future ...
  2. Breakout

    A price movement through an identified level of support or resistance, ...
  3. Double Top

    A term used in technical analysis to describe the rise of a stock, ...
  4. Rounding Bottom

    A chart pattern used in technical analysis, which is identified ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Appraised Equity Capital

    The excess of the market value of an asset over its book value. ...
Related Articles
  1. Active Trading Fundamentals

    Charting Your Way To Better Returns

    Learn about the powerful hybrid techniques that take advantage of both technical and fundamental analysis.
  2. Trading Strategies

    3 Key Signs Of A Market Top

    Learn the best ways to foresee market corrections and how to profit from them.
  3. Forex Education

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  4. Active Trading Fundamentals

    Digging Deeper Into Bull And Bear Markets

    Discover why it's important to know the characteristics of the two types of market conditions.
  5. Trading Strategies

    What is the Coppock curve?

    Technical analysis claims the ability to forecast future movements of financial instruments, such as stocks or commodities, through the study of past market data. By graphically portraying data, ...
  6. Trading Strategies

    Basics Of Technical Analysis

    Learn how chartists analyze the price movements of the market. We'll introduce you to the most important concepts in this approach.
  7. Charts & Patterns

    Analyzing Chart Patterns

    Learn how to evaluate a stock with a few easy-to-identify patterns.
  8. Technical Indicators

    What are the best technical indicators to complement the Negative Volume Index (NVI)?

    Explore other technical indicators that can be used when designing a trading strategy that incorporates the negative volume index.
  9. Technical Indicators

    What is a common strategy traders implement when using Moving Average Envelopes?

    Read about some of the most common trading strategies and signals you can use with moving average envelopes on an asset's price chart.
  10. Forex Strategies

    How do I use Moving Average Envelopes to create a forex trading strategy?

    Discover how to use moving average envelopes to build a trading system in the forex market, including which indicators best complement envelope strategies.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center