What is a rounding bottom pattern?

The rounding bottom pattern is a chart formation commonly found in technical analysis. It is a reversal pattern that forms when a stock has been trending lower and then starts to stabilize at the bottom, gradually rounding out its shape. This pattern is characterized by a series of lower highs and higher lows, followed by a breakout from the pattern in the opposite direction of the initial trend. Traders look for this pattern as a potential signal for a bullish reversal, indicating a possible shift from a downtrend to an uptrend. The rounding bottom is similar to the rounding top pattern, which is a reversal pattern that forms when a stock has been trending higher.