A gradual dome-shaped formation signalling a slow reversal from an uptrend to a downtrend. This pattern represents a distribution phase, where buyers gradually lose control, and selling pressure increases over time.
✳️ Formation Context
- Develops after a sustained uptrend, as bullish strength begins to fade gradually
- Price forms a rounded top structure, showing slow seller dominance over time
- Appears during distribution phases, before the trend reverses downward
🔷 Characteristics
- Price action forms a broad inverted U-shape, without sharp peaks or drops
- Volume is high near the start, then decreases, rising again near the breakdown
- Breakdown occurs when price falls below the support level formed at the base
- Takes several weeks or months to fully develop on higher timeframes
🌐 Market Condition
- Suited for long-term trend reversals in equities, commodities, and major indices
- Most effective in mature uptrending markets showing signs of exhaustion
🎯 Trading Strategy
- Entry Point: Sell when price breaks below the base support with increased volume
- Stop-loss: Above the right side swing high near the breakdown
Target Price: Measure the height of the top and subtract it from the breakdown level