Trends/Reversal patterns

Rounding bottom

A slow, curved fall and recovery that looks like a bowl.

Reversal patternsBest on 1Y, 3Y, 5YAlso called saucer, bowl

Illustration of the rounding bottom shape. It is a sketch, not real price data.

What it shows

A rounding bottom shows prices falling gradually, flattening, and then rising gradually. There is no single sharp low. The curve can take months or years.

The shape is found by fitting a curve to the prices and checking that the middle sits below both ends.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Take the closes of a window of at least 60 bars.
Fit a parabola (a U-shaped curve) to the closes.
Require the curve to open upward, fit with R-squared of at least 0.6, and have its lowest point in the middle third of the window.
Draw the fitted curve.

Starting values: Minimum bars 60; Minimum R-squared 0.6; Low point position middle third. These are proposed and will be tuned on real price data before launch.

How to read it

The blue curve is the fitted bowl.
The price path wanders around it.
The width of the bowl shows how slowly the turn happened.

Status labels you may see

Label	What it means
Forming	A bowl fit is valid, price still on the right side of the bowl.
At the rim	Price has reached the left rim level.
Failed	Price fell below the bowl.

What cancels it

A close well below the bottom of the bowl.

What traders check next

Whether volume was low at the bottom and rose on the right side.
Whether the curve is smooth or jagged.
How long the bowl took to form.

Limits

A curve can be fitted to many sets of prices.
It looks clearer in hindsight.
A long bowl can be hard to trade.

Try it in forecastviz

Open any ticker and choose Reversal patterns → Rounding bottom in the left menu.
Switch between 1Y, 3Y, 5Y to see how the picture changes.
Compare with Rounding top and Cup and handle on the same chart.

Open on a ticker

Questions

How is it different from a V bottom?

A V bottom is sharp. A rounding bottom is gradual.

Is a cup and handle the same?

A cup and handle is a rounding bottom followed by a small pause called the handle.