As of 12/13/2019
  Indus: 28,135 +3.33 +0.0%  
  Trans: 10,776 -13.65 -0.1%  
  Utils: 857 +7.17 +0.8%  
  Nasdaq: 8,735 +17.56 +0.2%  
  S&P 500: 3,169 +0.23 +0.0%  
YTD
 +20.6%  
 +17.5%  
 +20.2%  
 +31.6%  
 +26.4%  
  Targets    Overview: 12/13/2019  
  Up arrow28,600 or 27,400 by 01/01/2020
  Up arrow11,300 or 10,500 by 01/01/2020
  Up arrow880 or 830 by 01/01/2020
  Up arrow9,000 or 8,400 by 01/01/2020
  Up arrow3,250 or 3,075 by 01/01/2020
As of 12/13/2019
  Indus: 28,135 +3.33 +0.0%  
  Trans: 10,776 -13.65 -0.1%  
  Utils: 857 +7.17 +0.8%  
  Nasdaq: 8,735 +17.56 +0.2%  
  S&P 500: 3,169 +0.23 +0.0%  
YTD
 +20.6%  
 +17.5%  
 +20.2%  
 +31.6%  
 +26.4%  
  Targets    Overview: 12/13/2019  
  Up arrow28,600 or 27,400 by 01/01/2020
  Up arrow11,300 or 10,500 by 01/01/2020
  Up arrow880 or 830 by 01/01/2020
  Up arrow9,000 or 8,400 by 01/01/2020
  Up arrow3,250 or 3,075 by 01/01/2020

Bulkowski's Rounding Bottoms

 

Statistics updated on 1/24/2019.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 595 to 607.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

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Rounding bottoms are chart patterns that are difficult to spot unless you look on the weekly scale. The break even performance rank is small and the average rise is large, so they show good performance.

Be careful midway through the turn since price sometimes shoots up only to drop back down.

Rounding bottom chart pattern
Rounding bottom chart pattern

 

Rounding Bottom: Important Bull Market Results

Overall performance rank (1 is best): 5 out of 56
Break even failure rate: 3%
Average rise: 58%
Throwback rate: 38%
Percentage meeting price target: 64%

The above numbers are based on 687 perfect trades. See the glossary for definitions.

Rounding Bottom: Identification Guidelines

CharacteristicDiscussion

A bump in a rounding bottom chart pattern

Bump

Weekly or dailyThe pattern appears on either the daily or weekly chart. Concentrate on finding them on the weekly scale because the rounded nature is more apparent.
Price trendPrice trends upward to the pattern 66% of the time (that is, 66% act as continuation patterns).
ShapeLook for a rounded bowl shape, usually over many months and usually after an upward price trend.
BumpPrice may shoot up midway through the turn, near the bottom, but price usually retraces most (not all) of the way back to where it started. The Bump figure to the right shows an example as does the figure at the bottom of this page.
ConfirmationI use a close above the left peak because price on the right might not pause at a minor high.

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Rounding Bottom: Trading Tips

Consult the associated figure on the right.

Trading TacticExplanation Rounding bottom measure rule
The Measure Rule

Rounding bottom handle

Handle

Flat Base

Flat Base

Measure ruleCompute the height from the left saucer lip to the lowest valley in the pattern then multiply it by the above 'percentage meeting price target.' Add the difference to the right saucer lip to get a price target. If the saucer doesn't have a right lip then use the left rim. The Measure Rule figure to the right uses the left lip (A) to the lowest valley (B) as the height.
SwingersSwing traders can sell if price bumps up midway through the rounding turn. Buy back in once price retraces back to near the price at which the bump started. Price usually re-enters the rounding turn higher than the price of the bump start.
PausePrice often pauses at the price level of the left saucer lip.
HandleIf the rounded bottom forms a handle at the right saucer lip, draw a trendline from the left lip to the right and extended downward beyond the handle. Buy when price closes above the trendline. The Handle figure to the right shows this situation. The red line is the trendline connecting the left rim to the right rim and extended downward. Don't use this method the line sloped upward.
Flat baseA flat base (predominantly flat over several months) leading to the rounding turn often leads to a powerful rally. The Flat Base figure to the right shows an example.
Yearly middlePatterns that breakout in the middle third of the yearly price range do best.
ThrowbacksThrowbacks hurt post breakout performance.

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Rounding Bottom: Examples

Rounding bottom chart pattern example in Encore Wire (WIRE)

This is an example of a rounding turn. The bump up begins near the middle of the rounding turn and ends near the same price at which it took off.

Rounding bottom chart pattern example in Steelcase (SCS)

This example shows Steelcase (SCS) on the daily scale. The chart is a bit compressed vertically, so the turn is not as rounded as it looks on my computer screen.

This chart is an excellent example of the mid-turn bump-up in price. I show that circled in green beginning from the launch price of A to B. Notice that B almost makes it back down to A before the uptrend resumes.

-- Thomas Bulkowski

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Rounding Bottom: Other Examples

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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