Rounding Tops and Bottoms Rounding tops occur as expectations gradually shift from bullish to bearish. The gradual, yet steady shift forms a rounded top. Rounding bottoms occur as expectations gradually shift from bearish to bullish. Volume during both rounding tops and rounding bottoms often mirrors the bowl-like shape of prices during a rounding bottom. Volume, which was high during the previous trend, decreases as expectations shift and traders become indecisive.
Volume then increases as the new trend is established.
The following chart shows Goodyear and a classic rounding bottom formation. Triangles A triangle occurs as the range between peaks and troughs narrows. Triangles typically occur as prices encounter a support or resistance level which constricts the prices. The odds favor an upside breakout from an ascending triangle. The odds favor a downside breakout from a descending triangle.