Double Bottom
The Double Bottom is a bullish reversal pattern that appears after a sustained downtrend. It consists of two distinct lows at approximately the same price level, separated by a moderate peak. This pattern indicates that selling pressure is weakening and buyers are stepping in at support levels.
Best Timeframe
4H - 1D
Average Move
10-20%
- 1
First Bottom: Price declines to a significant low and then bounces higher, often on increased volume.
- 2
Peak Formation: Price rises to form a peak between the two bottoms, establishing resistance.
- 3
Second Bottom: Price declines again to test the previous low, creating the second bottom at similar level.
- 4
Volume Confirmation: The second bottom typically shows lower volume than the first, indicating weakening selling pressure.
- 5
Breakout: Price breaks above the peak resistance level, confirming the reversal pattern.
Entry Point
Enter long position when price breaks above the peak resistance with volume confirmation
Stop Loss
Place stop loss below the lowest point of the double bottom
Target
Measure distance from bottom to peak, project same distance above breakout point
- The two bottoms should be at approximately the same price level (within 3-4%)
- Volume should be higher on the first bottom and lower on the second bottom
- The time between bottoms can range from weeks to months
- A pullback to the breakout level after confirmation is common
- The pattern works best when formed after a significant downtrend
- Entering before the breakout confirmation above resistance
- Ignoring volume patterns - second bottom should show less selling pressure
- Trading bottoms that are too far apart in price (more than 5% difference)
- Not waiting for proper retest of the breakout level
- Using the pattern in sideways markets without clear prior downtrend
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