The rounding bottom (also known as a saucer pattern) is a long-term bullish reversal formation characterised by a gradual, U-shaped transition from a downtrend to an uptrend. The pattern reflects a slow shift in sentiment from bearish to neutral to bullish, typically forming over weeks or months. A breakout above the pattern's resistance (the left rim level) confirms the reversal.
Gradual U-shaped curve rather than a sharp V-bottom. Volume typically mirrors the pattern: declining on the left side, rising on the right. Resistance at the rim level (the high point where the initial decline began). Duration is usually extended, making this a higher-timeframe pattern. Can include a brief handle or consolidation near the rim before breakout.
Enter on a confirmed breakout above the rim resistance level with expanding volume. Look for increasing momentum on the right side of the saucer as buying pressure builds. An aggressive entry is possible at the midpoint of the right side when volume begins to expand. Wait for a retest of the rim as new support for a conservative entry.
Measured-move target equals the depth of the saucer projected upward from the breakout point. Place stops below the most recent swing low on the right side of the pattern. Trail with a rising moving average such as the 20 EMA or 50 SMA. Exit if the breakout fails and price closes back below the rim.
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Rounding bottoms are long-term patterns best suited for position traders and swing traders. The volume profile is a crucial confirmation — a rounding bottom without the characteristic volume U-shape may not be a valid pattern. These patterns tend to produce sustained trends once confirmed, making them ideal for pyramiding strategies.
Pennants are short-term continuation patterns that form after a strong directional move. They resemble small symmetrical triangles, with converging trendlines creating a compact consolidation zone. Unlike flags, which have parallel channels, pennants converge to a point. The breakout typically occurs in the same direction as the preceding move, with the measured target based on the flagpole.
Bull and bear flags are continuation patterns consisting of a sharp price move (the flagpole) followed by a brief, counter-trend consolidation channel (the flag). Bull flags slope downward after an upward pole; bear flags slope upward after a downward pole. These patterns represent a pause in strong momentum before the trend resumes, and they are among the most commonly traded continuation setups.
Rising and falling wedges are converging trendline patterns where both support and resistance slope in the same direction. A rising wedge (both lines slope upward, converging) is typically bearish, while a falling wedge (both lines slope downward, converging) is typically bullish. Wedges differ from triangles because both trendlines slope in the same direction rather than converging symmetrically.
Ascending triangles form when price creates a horizontal resistance line at the top and a rising support trendline at the bottom, indicating buyers are becoming more aggressive. Descending triangles feature a horizontal support floor with a declining resistance trendline, suggesting sellers are gaining control. Both patterns are typically continuation patterns that resolve in the direction of the prevailing trend with a measured move target equal to the triangle's height.