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Rounding Bottom / Cup pattern is Basically an Accumulation pattern
When Stronger hands wants to buy the stock and they buy the stock very gradually in a very longer time span
they start sucking the stock from the market
to ensure a cup pattern we need to make sure that it is forming a Rounding Bottom in a cup shape in longer time span
It can be very much useful for an investors
Once cup is getting filled .. price goes up at that time we can buy the stock
A cup pattern is an accumulation pattern over a long period of time. Over this period the stock basically trades in a narrow trading range. Strong hands start accumulating slowly during this time.
Cup pattern is generally an Accumulation pattern. It happens when a strong hand starts gradually accumulating a stock over a long period of time. During this period, a stock trades at a narrow trading range.
Conditions :
- The rounding bottom or the cup shaped bottom should be identified.
- The correlation of market movement to the stock movement(which forms the Cup) should be low.
- Sluggish volume is required all over the rounding bottom.
Long position should be created when the cup starts filling(i.e., when the price starts moving beyond the narrow range).
Rounding top is usually not possible because when a stronger hand decides to sell a stock, it happens in a very short span of time.
Rounding bottom, is the volume is expected to be very low, Cup patterns are generally powerful it if takes long time to construct. The correlation between the marked to the stock should be low during the MID pattern Generally the inverted CUP is rare as distribution takes place in short span of time, Long Term.
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