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Unlike the quick, plentiful key reversal, a rounding top or bottom appears rarely and forms slowly. The formation is seen occasionally in interest-sensitive securities where wide price swings are not the norm. Rounding tops/bottoms occur gradually over several months, signifying a long, slow struggle between supply and demand. The longer the pattern takes to complete, the more significant it is in calling the direction of the new trend.

A rounding top is roughly shaped like an umbrella, with frequent small peaks (Figure 8). The rounding bottom has the gentle curve of a teacup saucer (Figure 9) . Volume tends to rise through the first portion of the curve and stabilize during the advance. The rounding bottom does not have a clear-cut buy signal, so a trader can either wait for a sharp increase in volume on the upside of the curve or wait conservatively until a definite uptrend line can be drawn through the bottoms of the upside curve. These longer-term formations can offer good gains for the investor, as the formations are due to long-term changes in stock fundamentals. As the fundamental data become clearer to the investing public, the long-term trends will be very much in force. Looking for these long-term rounding formations can provide opportunities well ahead of the crowd.

FIGURE 1 The head-and-shoulders pattern most resembles a trader shrugging. This pattern usually occurs at the end of a long uptrend and is one of the most common and reliable reversal formations.

FIGURE 2 The shift from supply to demand, from distribution to accumulation, creates bottoming patterns.

FIGURE 3 Double and triple tops or bottoms are successive peaks or troughs of approximately the same height that signal intermediate- to long-term changes in trend. A double top looks like the letter M; a double bottom resembles a W.

FIGURE 4 Considered the heralds of excellent profit opportunities, triangles can take anywhere from several weeks to several months to complete. A descending triangle as shown here is considered bearish.

FIGURE 5 Like a triangle, wedges also define converging prices, although a wedge's boundaries are slanted. The breakdown from a rising wedge is a sign the market is technically weak and prices will fall, especially if the broad market is already in a bear market.

FIGURE 6 A quick, simple pattern that occurs frequently, a key reversal arrives and completes during a single trading day, and its significance is for the short term. Key reversal tops appear most regularly in thinly traded stocks that have made an active advance.

FIGURE 7 Key reversal bottoms are also known as selling climaxes. Extremely high volume usually accompanies key reversals. The key reversal bottom is at the final stages of liquidation and extreme bearishness.

FIGURE 8 Rounding tops and bottoms are rare patterns that form slowly. The formation is seen occasionally in interest-sensitive securities where wide price swings are not the norm. Rounding tops are roughly umbrella-shaped, with frequent small peaks.

FIGURE 9 The rounding bottom has the curve of a teacup saucer. The bottom formation does not have a clear-cut buy signal, so the trader can either wait for a sharp increase in volume on the upside curve or wait until a definite uptrend line can be drawn through the bottom of the upside curve.