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The Double Bottoms is a charting pattern used in technical analysis. It is made of two price drops almost to the same level followed by a rebound to the upside, and separated by a price high or peak.

Double Bottoms Pattern

Patterns Analysis 184 Views

The Double Bottoms is a charting pattern used in technical analysis. It is made of two price drops almost to the same level followed by a rebound to the upside, and separated by a price high or peak. This price level is called a Neckline. After the second touch the Neckline is considered a support level.

FXLORDS | Double Bottoms

This is the opposite chart pattern to the double tops and it signals a reversal of the downtrend into an uptrend. The double bottom looks like the letter “W”

The peak between the two lows should be 10-20% off the first bottom. The second bottom should form within 3-4% of the first low, and the trading volume should be on an increase.

The double bottom is formed when a downtrend sets a new low to find support, which prevents the price from moving lower. Upon finding support, the price will rally to find the middle high or peak, which will form a resistance level. The next stage of the Double Bottoms pattern is another sell-off that takes the price down to the previous low.

These two support tests form the two bottoms. 

Remember that the price needs to break through the Neckline to signal a reversal in the downward trend, and it needs to break it on increased volume in trading. As in the Double Tops pattern, do not be surprised if the price returns to the breakout point to test the new support level in the up-trend.

About Razi Hammouda

Razi’s professional experience was gained over the course of more than a decade working with leading Forex market makers in the Middle East, Asia and Europe where he learned about trading, financial instruments and global markets. Being exposed to the wide range of skills he acquired along the years, he continued to develop his trading strategies and further improving his track record in Forex trading. He used innovative business development strategies to find FXLORDS, helping it to rapidly become a major provider of education and trading tools to the successful trader. He is an enthusiastic individual, motivated by challenge and renowned for pushing the limits, always looking to gain some more experience and help as much as possible along the way.

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Double Tops

The Double Tops is a bearish reversal pattern made of two consecutive peaks that are roughly equal, with a price drop between those two peaks. The level to which the price drops to is called a Neckline.

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