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Trading and Investment Terms

Double Bottom

The Double Bottom Reversal is a bullish reversal pattern typically found on bar charts, line charts, and candlestick charts. 

 

As its name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between

  • A double bottom has a 'W' shape and is a signal for a bullish price movement.

key points in the formation

  1. Prior Trend
  2. First Trough
  3. Peak
  4. Second Trough
  5. Advance From Trough
  6. Resistance Break
  7. Resistance Turned Support
  8. Price Target

It is important to remember that the Double Bottom Reversal is an intermediate to long-term reversal pattern that will not form in a few days. 

Even though formation in a few weeks is possible, it is preferable to have at least 4 weeks between lows. Bottoms usually take longer to form than tops

 

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