Double Bottom Pattern
The double bottom is a bullish reversal pattern that forms after an extended downtrend. It consists of two consecutive troughs at approximately the same price level, signaling that the downtrend may be ending.
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Download ChartedKey Characteristics
Trading Tips
- ✓Wait for breakout above the neckline
- ✓Look for bullish divergence on second low
- ✓Volume should increase on breakout
- ✓Consider the overall market trend
Signal Strength & Reliability
Double bottoms have a success rate of 65-75%, similar to double tops. They work best when the second bottom shows bullish divergence with momentum indicators and the breakout is accompanied by increased volume.
Double Bottom FAQs
Common questions about the double bottom pattern
A double bottom indicates a potential reversal from a downtrend to an uptrend. It shows that sellers are losing momentum and buyers are stepping in at a particular support level, typically signaling a buying opportunity.
The traditional price target is the pattern's height (distance from lows to neckline) added to the breakout point. For example, if the pattern is $10 tall and breaks out at $50, the target is $60.
They're the same pattern - 'W pattern' is simply another name for double bottom because the shape resembles the letter W. Both terms describe two lows at similar levels with a peak between them.
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Disclaimer: Charted provides technical analysis for educational purposes only. This is not financial advice. All trading involves risk. Always consult a licensed financial professional before making investment decisions.
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