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Bulkowski's Rounding Top

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As of 04/25/2019
  Industrials: 26,462 -134.97 -0.5%  
  Transports: 10,846 -253.37 -2.3%  
  Utilities: 780 +3.53 +0.5%  
  Nasdaq: 8,119 +16.67 +0.2%  
  S&P 500: 2,926 -1.08 0.0%  
YTD
 +13.4%  
 +18.3%  
 +9.5%  
 +22.4%  
 +16.7%  
  Tom's Targets    Overview: 04/12/2019  
  Up arrow26,900 or 25,500 by 05/01/2019
  Up arrow11,200 or 10,500 by 05/01/2019
  Up arrow825 or 755 by 05/01/2019
  Up arrow8,250 or 7,850 by 05/15/2019
  Up arrow2,975 or 2,800 by 05/01/2019
As of 04/25/2019
  Industrials: 26,462 -134.97 -0.5%  
  Transports: 10,846 -253.37 -2.3%  
  Utilities: 780 +3.53 +0.5%  
  Nasdaq: 8,119 +16.67 +0.2%  
  S&P 500: 2,926 -1.08 0.0%  
YTD
 +13.4%  
 +18.3%  
 +9.5%  
 +22.4%  
 +16.7%  
  Tom's Targets    Overview: 04/12/2019  
  Up arrow26,900 or 25,500 by 05/01/2019
  Up arrow11,200 or 10,500 by 05/01/2019
  Up arrow825 or 755 by 05/01/2019
  Up arrow8,250 or 7,850 by 05/15/2019
  Up arrow2,975 or 2,800 by 05/01/2019

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

Statistics updated on 1/28/2019.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 608 to 623.

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

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Rounding top chart pattern
Rounding Top Chart Pattern

 

Rounding Top: Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): Not ranked
Break even failure rate for up/down breakouts: 7%; 13%
Average rise/decline: 63%; 19%
Throwback/pullback rate: 44%; 44%
Percentage meeting price target for up/down breakouts: 62%; 13%

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

Rounding Top: Identification Guidelines

CharacteristicDiscussion
Weekly or dailyRounding tops are large enough to appear on the weekly or daily chart.
Price trendUpward leading to the chart pattern.
Even endsThe rims of the inverted bowl bottom near the same price. 58% of the time the end is slightly higher than the start.
Rounded turnPrices form a gentle curve, a half moon shape.
BreakoutA close above the highest high signals an upward breakout. Downward breakouts are a close below the lower of the two rims (the lowest low in the pattern).
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Rounding Top: Trading Tips

Trading TacticExplanation
Measure ruleCompute the height from the highest peak in the pattern (point A in the Measure Rule figure to the right) to the right rim low (B) and then multiply it by the above “percentage meeting price target.” Add it to the price of the highest peak (A, upward breakouts) or subtract it from the right rim low (B, downward breakouts) to get a target price (C).
32% retraceFor aggressive traders, if price retraces 32% of the rounding top's height, buy. The Retrace figure to the right shows an example. Measure the height from A to B and then take 32% of this. Add it to the low at B to get a target of C. C represents the buy price.
SupportThe two rims are support areas.
HeightTall patterns perform better than short ones.
Breakout volumeHeavy breakout volume suggests better performance.
Right rimWhen the right rim is above the left, the pattern under performs. The Retrace figure to the upper right shows an example, with the right bottom (B) above the left (D).
Yearly lowPerforms slightly better when the breakout is within a third of the yearly low but samples are few (6 only).
Throwbacks and pullbacksThrowbacks and pullbacks hurt post breakout performance.
Rounding top measure rule
The Measure Rule

Rounding top retrace

Retrace

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Rounding Top: Example

Rounding top chart pattern example

The above figure shows an example of a rounding top chart pattern. Price bottoms at the start, A, climbs to the top at B, and then rounds down to C. In this example, when price rises above the 32% retrace buy point, it signals a purchase. That signal worked well here.

-- Thomas Bulkowski

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See Also

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. The gene pool could use a little chlorine.