First, read the fall without naming it
Imagine an illustrative share that was already falling before our weekly chart begins. Its weekly closes then go ₹120, ₹115, ₹110, ₹106, ₹103, ₹101, ₹100, ₹100. The falls are getting smaller and eventually stop for a time. At this point there is no rounding bottom. The share may simply be pausing before another fall.
Now add ₹101, ₹103, ₹106, ₹110, ₹114 and ₹118. The left side fell gradually, the middle flattened, and the right side rose gradually. Read together, those weeks make a broad U, often called a rounding bottom or saucer bottom. There is no requirement for a perfect semicircle; real prices wobble.
The mirror after an earlier rise is a rounding top: advances get smaller, the chart flattens, and then price begins to descend. It looks like an arch. If there was no earlier rise or fall to reverse, the same curve may just be part of a range.
The rim is still ahead of price
Choose a bottom or top. The chart stops while the right side is near, but has not crossed, the price where its left side began. Reveal two possible later paths.
Only weekly closes are shown. The picture hides each week's highs, lows and volume. The dashed rim is the rule chosen for this example, not a universal threshold.
At ₹100 in the bottom chart, before any right side has developed, what does Lakshmi know?
Why Lakshmi uses weekly bars here
She is studying a slow change over many weeks. A weekly view lets her see that falling weekly closes have flattened and then begun to climb. On a one-minute chart, a similar U might describe only a small intraday pause. Choose the time horizon before you hunt for the curve. For a long-term question, the weekly view is useful; it is a poor tool for deciding where to place an order this afternoon.
For this exercise she also writes down a test before the next week arrives: a completed weekly close beyond the left rim — above ₹120 for the bottom, below ₹80 for the top. That test makes her claim checkable. Another analyst could choose a different prior reaction high or low and should say so in advance. Crossing the rim completes this particular definition; it does not prove a lasting reversal.
Volume can add a separate observation. Did trading expand as the right side rose? Compare it with comparable completed weeks, not with a single unusually quiet week. The close-only diagram cannot answer that question. An OHLC chart also reveals intraperiod swings that this line hides; use it before treating a smooth line as a smooth trading experience.
- ₹120 down to ₹100
- prior fall has continued, then slowed
- ₹100 back to ₹118
- a possible rounded bottom is now visible
- Weekly close ₹121
- the stated ₹120 rim rule is met
- A later return below ₹120
- the break did not hold; the label was no guarantee
When the name gets in the way
A sharp V is a different price path: one fast drop followed almost immediately by a fast rise. Stretching the scale to make it look rounded does not change those moves. Nor should you force a top or bottom onto a short pause inside a larger trend.
The biggest mistake is drawing the full U while standing at its lowest point. The right side was not available then. If Rahul chooses the start and end only after seeing a successful break, the example has been selected by its outcome. He should mark the earlier price area, hide later bars, and ask what he could have said then. Lesson 07.05.05 returns to this hindsight problem.