Double Bottom Chart Pattern Technique

What is a Double Bottom Chart Pattern?

A Double Bottom is a reversal pattern that happens at the height of a downward slope and can indicate the commencing of an up trend.

How To Recognize a Double Bottom Chart Pattern

A double bottom chart pattern takes place in four steps: 1. A new low for price is reached 2. The price finds support and rises to a new high, creating a new resistance point 3. The price commences to move back down to support, but then rises again towards resistance 4. The price breaks through resistance, building an upward trend

What Does a Double Bottom Chart Pattern Mean?

A double bottom chart pattern can signify a tug of war between buyers and sellers. As sellers attempt to push the contract, buyers resist the down trend. When once again the bottom of the pattern isn't broken, the sellers begin to back off, leading the buyers to dominate and send the price up.

Watch the new up trend, as it may drop back down to the breakout point to test the new support.

Big W

Note that a similar chart pattern is the Big W, which has all the principles of a Double Bottom, but with much steeper moves.

About the Author

Having and knowing the correct tools are essential for trading. This week, I'd like to encourage you, particularly if you are a day trader, to examine and Learn about the most effective chart patterns, how to identify them, and what they may mean for your trading. Chart patterns include: Double Tops, Double Bottoms, Flags, Head and Shoulders Tops, Head and Shoulders Bottoms, and many more.