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
HDFC Bank
HDFC Bank is one of India’s largest private sector banks, offering a wide range of banking and financial services, including retail banking, wholesale banking, and treasury operations. The bank merged with its parent company, HDFC Ltd, in 2023, creating a financial services powerhouse.
The breakout level for the rounding bottom pattern is Rs. 1,874, and the stock closed at Rs. 1,923.90, above the breakout level. The next resistance zone for the stock is the round level of Rs. 2,000, as it is trading at an all-time high. The nearest support zone for the stock is at Rs. 1,756.
Grasim Limited
Grasim Industries, a flagship company of the Aditya Birla Group, is a diversified player with interests in textiles, cement, chemicals, and financial services. It is one of the world’s largest producers of viscose staple fiber and a leading cement producer in India through its subsidiary UltraTech Cement.
The breakout level for the rounding bottom pattern is Rs. 2,721, while the stock closed at Rs. 2687.60, below the breakout level. Although it initially broke out, it has since slipped back beneath this key level. The next resistance zones for the stock are around Rs. 2,800 and Rs. 2,845, while the nearest support zone is at Rs. 2,510.
Written by Sridhar J
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