The Rounding bottom is also called a saucer bottom pattern, which is a bullish chart pattern and signals a reversal from a downtrend to an Uptrend. This pattern forms gradually and is usually a U-shaped pattern. It also indicates accumulation, which means that sellers are gradually taking an exit and buyers are taking control.
How to Identify the Rounding Bottom Pattern?
- Long-term decline in stock prices
- A curved pattern is forming, suggesting that the downward trend is starting to lose momentum
- Notice a gradual price increase that mirrors the left side of the pattern
- Confirm the pattern with increasing volume as the price rises
How to Trade the Pattern
Entry is done when price breaks above the resistance level, which was formed at the beginning of the pattern. The target is set by measuring the depth of the pattern ( depth from breakout level to bottom of pattern ), and the Stop-loss is placed at some points below the breakout level.
Here are the stocks to keep an eye on
Mazagon Dock Shipbuilders Ltd
MDL is India’s premier warship and submarine builder, established in 1774 and headquartered in Mumbai. As a Navratna PSU under the Ministry of Defence, it has delivered over 800 vessels, including 28 warships and 7 submarines. MDL specializes in constructing advanced naval platforms, such as destroyers, frigates, and offshore patrol vessels, and has modernized its facilities to enhance modular construction capabilities.
The breakout level for the rounding bottom pattern is Rs. 2,872.35, and the stock closed at Rs. 3,057.60 in the last trading session, above the breakout level, and is currently rallying. The next resistance zone for the stock is the round level of Rs. 3,500, as it is trading at an all-time high. The nearest support zone for the stock is at Rs. 2,319.
Bharat Dynamics Limited
BDL is a leading manufacturer of guided missile systems and allied equipment for the Indian Armed Forces. Incorporated in 1970 and based in Hyderabad, it collaborates with DRDO and foreign OEMs to produce indigenously developed missiles like Akash and Astra. BDL has evolved into a Weapon System Integrator and is actively involved in the ‘Atmanirbhar Bharat’ initiative, focusing on indigenization and technological advancements.
The breakout level for the rounding bottom pattern is at Rs. 1,479.50, while the stock closed at Rs. 1,529.60 in the last trading session, above the breakout level, and is currently rallying. The next resistance zone for the stock is around Rs. 1,734, while the nearest support zone is at Rs. 1,242.15.
Astra Microwave Limited
Astra Microwave Ltd is an Indian company specializing in the design and manufacture of microwave components and sub-systems for defense and aerospace applications. The company provides solutions for radar, communication, and electronic warfare systems, supporting both domestic and international defense requirements.
The breakout level for the rounding bottom pattern is at Rs. 850.50, and the stock has yet to break out of the pattern, closing at Rs. 828.65 in the last trading session, below the breakout level. The next resistance zone for the stock is around Rs. 936.20, while the nearest support zone is at Rs. 786.05.
Written by Sridhar J
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