Trading Tips

Some patterns are mirror images of others: The double top, for example, is just like the double bottom — only in reverse. A double top is bearish, while a double bottom is bullish. But if you understand how double tops work, all you have to do is apply the same principles — in reverse — to double bottoms.

The same can be said of rounded tops and rounded bottoms — the subject of this TradingTips.com episode. Here, you’ll learn the basics of two chart patterns in one lesson: master the rounded top, and you’ll have the rounded bottom down pat. It’s easy!

In this episode, you’ll learn:

- How to spot a rounded top (0:27)

- What a rounded top predicts — and what it does NOT (0:50)

- How to know when to place your trade using the stock’s moving average (1:08)

- How to take trading volume in consideration when trading a rounded top (1:25)

Then, at the 1:37 mark, the video switches to rounded bottoms and shows you how to apply the same lessons you’ve already learned, in reverse.

Rounded tops and bottoms can be very useful in placing winning trades, and once you understand one, you’ll understand the other. But there’s more to it than just being able to recognize the chart patterns — you have to know how to trade them using volume and moving averages, too. That’s all covered in this TradingTips.com video.

Happy Trading!

Manny Backus
CEO, Wealthpire Inc.

P.S. Next week I’ll show you how to filter out “market noise” using the ZigZag overlay. It’s an easy-to-use tool that most traders don’t know about, and you can use this to your advantage!

Episode 39 - Rounded Tops and Bottoms

Download the slides for “Rounded Tops and Bottoms”