Circular ridges

Circular ridges

By Boltvitaps | Trading Course | 8 May 2020


Circular ridge

This chartist figure is formed as prices draw a slow curve, giving a signal to change from a bullish trend to bearish, it is also known as a rounded ceiling.
This pattern is common in stocks, can be seen in cyclical stocks or that entered a strong downtrend for various reasons.
This formation is less likely to see assets with high levels of trading where investors easily enter and exit, although it could also happen.
Circular ridges, or rounded ceilings, are less frequent than rounded floors.

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The circular ridge has the following characteristics:


Previous uptrend.
Since it is a pattern of trend change.


Low volume.
The volume usually increases at the beginning and end of the pattern, but when it reaches the rounded part, it is very low.


Weather.
It usually takes a while to form, most lasting months and sometimes years.
It would be very rare for you to see it on an intraday.


Expected movement.
Bullish trends usually end with quite violent and rapid movements.
We should enter to trade in the support break, and if possible, wait for a pullback to the resistance.
It is one of the best ways to deal with a new downtrend.

 

Inverted circular ridge

When the change in trend is from bearish to bullish, that is, prices are drawing a slow downward curve, it is called an inverted circular crest or rounded floor.
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The inverted circular ridge has the following characteristics:


Previous downtrend.


Low volume.
The previous downtrend may have had a volume increase, but upon reaching the rounded ground base or inverted circular crest, the volume is very low.
However, when the rounded floor leaves its base, the volume has to increase, which would indicate the change in trend.


Weather.
Like the circular ridge or rounded roof, this figure usually takes a while to form, most lasting months and sometimes years.
It would be very rare for you to see it on an intraday.


Expected movement.
There is no precise technique to know what is the expected movement of this pattern, however the longer the duration of the inverted circular crest, the greater the upward movement that can be expected.



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