What You Need To Know About Rounding Top And Bottom
The currency pair that you are looking at is at its all-time high. You are unsure if you should go Long right now. This pair has been exceeding expectations for some months now. Your peers have made their share and you dont want to be left out. But you are afraid.To get more news about WikiFX, you can visit wikifx official website.
These 2 chart patterns are extremely helpful in warning you of an upcoming reversal, allowing you to make money. They are the rounding bottom and rounding top chart patterns.Just prior to the rounding bottom, prices could be rising or falling. At the start of the rounding bottom, prices start to fall due to heavier selling.
After some time, optimism returns and the demand pushes prices up. This results in the right side of the rounding bottom forming.
Prices are rising. Optimism is high and prices seem to lack gravity. All of a sudden, prices seem to lose momentum.
Gradually, prices started to decline, forming the right side of the rounding top chart pattern. Pessimism has crept in.
Before you know it, prices plunge below the resistance zone (in gray), never turning back.
Spot It Right
To avoid getting caught in a fake rounding top and bottom chart pattern, youll need to know the characteristics of both patterns.
Volume is a critical component in identifying these chart patterns correctly.