IEX Rounding Bottom Pattern
IEX has formed a bullish chart pattern called Rounding Bottom.
A rounding bottom, also known as a saucer bottom, is a technical analysis pattern that signals a potential reversal from a bearish to a bullish trend. It is characterized by a gradual decline in price followed by a gradual rise, creating a shape resembling a "U." Here's a detailed guide on how to trade this pattern, inspired by principles often discussed in trading academies like Arvind Share Academy:
Identifying a Rounding Bottom
Formation Period: This pattern typically forms over a long period, ranging from several weeks to months. Here it takes approximately 2 years
Volume Analysis: Volume usually decreases as the price declines and remains low during the bottoming process. As the price starts to rise, volume typically increases.
Pattern Shape: The price action creates a U-shaped curve, indicating a gradual shift in sentiment from bearish to bullish.
Trading Strategy for Rounding Bottom
1. Confirmation of the Pattern
Wait for the price to break above the resistance level formed at the beginning of the rounding bottom. This breakout confirms the pattern.
Increased volume on the breakout reinforces the validity of the pattern.
2. Entry Point 180
Enter the trade when the price closes above the resistance level on strong volume.
Some traders may wait for a pullback to the breakout level to enter a trade for a better risk/reward ratio.
3. Setting Stop-Loss below 160
Place a stop-loss order below the lowest point of the rounding bottom to protect against false breakouts.
Alternatively, a more conservative approach is to place the stop-loss below a recent support level after the breakout.
4. Profit Target 280
Measure the distance from the lowest point of the pattern to the resistance level. This distance can be projected upwards from the breakout point to estimate the potential price target.
Some traders may use trailing stops to lock in profits as the price continues to move in their favor.
5. Monitoring Volume
Continuously monitor volume to ensure it supports the price movement. Declining volume during the breakout or subsequent uptrend can signal weakening momentum.
Thanks & Regards
Arvind Yadav, Cfa
Arvind Share Academy
A rounding bottom, also known as a saucer bottom, is a technical analysis pattern that signals a potential reversal from a bearish to a bullish trend. It is characterized by a gradual decline in price followed by a gradual rise, creating a shape resembling a "U." Here's a detailed guide on how to trade this pattern, inspired by principles often discussed in trading academies like Arvind Share Academy:
Identifying a Rounding Bottom
Formation Period: This pattern typically forms over a long period, ranging from several weeks to months. Here it takes approximately 2 years
Volume Analysis: Volume usually decreases as the price declines and remains low during the bottoming process. As the price starts to rise, volume typically increases.
Pattern Shape: The price action creates a U-shaped curve, indicating a gradual shift in sentiment from bearish to bullish.
Trading Strategy for Rounding Bottom
1. Confirmation of the Pattern
Wait for the price to break above the resistance level formed at the beginning of the rounding bottom. This breakout confirms the pattern.
Increased volume on the breakout reinforces the validity of the pattern.
2. Entry Point 180
Enter the trade when the price closes above the resistance level on strong volume.
Some traders may wait for a pullback to the breakout level to enter a trade for a better risk/reward ratio.
3. Setting Stop-Loss below 160
Place a stop-loss order below the lowest point of the rounding bottom to protect against false breakouts.
Alternatively, a more conservative approach is to place the stop-loss below a recent support level after the breakout.
4. Profit Target 280
Measure the distance from the lowest point of the pattern to the resistance level. This distance can be projected upwards from the breakout point to estimate the potential price target.
Some traders may use trailing stops to lock in profits as the price continues to move in their favor.
5. Monitoring Volume
Continuously monitor volume to ensure it supports the price movement. Declining volume during the breakout or subsequent uptrend can signal weakening momentum.
Thanks & Regards
Arvind Yadav, Cfa
Arvind Share Academy
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