List of Financial Market Terms

A Rounding Top is a chart pattern used in technical analysis which is made up of price movements that form the shape of an upside down "U". They generally form at the end of an extended upward trend and indicates a reversal in upward price movement. 

It's used by Traders as a reversal pattern. The difference in the troughs (A) and the peaks (B) is generally the minimum the stock will fall from the B line.

Here's an example of a Rounding Top, taken from the live trading room. This particular example shows a Rounding Top after a short term pop to illustrate that this is another form of occurrence with regard to this pattern:

rounding top pattern in TAP stock

RT's can develop over several weeks, months or even years, and is considered a rare occurrence in stock trading, options trading, and futures trading.

Related terms: Consolidation Breakout, Double Top Pattern, Double Bottom Pattern, Triple Top Pattern, Triple Bottom Pattern, Broadening Pattern.


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