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
Indian Oil Corporation Limited (IOCL)
Indian Oil Corporation Limited (IOCL) is India’s largest government-owned oil and gas company, headquartered in New Delhi. Established in 1959, it operates across the entire hydrocarbon value chain, including refining, pipeline transportation, marketing of petroleum products, and exploration and production of oil and gas. IOCL has a consolidated refining capacity of 80.55 million metric tonnes per annum (MMTPA).
The breakout level for the rounding bottom pattern is Rs. 145.09, and the stock closed at Rs. 144.08 in the last trading session, and is currently trading below the breakout level. The next resistance zone for the stock is Rs. 168.5, and the nearest support zone for the stock is at Rs. 133.
Bharat Petroleum Corporation Limited (BPCL)
Bharat Petroleum Corporation Limited (BPCL), founded in 1976 and headquartered in Mumbai, is a prominent public sector oil and gas company in India. It operates three major refineries in Mumbai, Kochi, and Bina, with a combined refining capacity of 36.3 million metric tonnes per annum. BPCL is involved in the marketing of petroleum products, natural gas, liquefied natural gas (LNG), lubricants, and petrochemicals.
The breakout level for the rounding bottom pattern is Rs. 316.60, and the stock closed at Rs. 311.50 in the last trading session, and is currently trading below the breakout level. The next resistance zone for the stock is Rs. 353.25, and the nearest support zone for the stock is at Rs. 292.75.
Written by Sridhar J
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