Double Bottom
Tue, Apr 15A Double Bottom is a chart pattern where the price touches a low twice and does not drop lower during the second attempt, instead moving upward.
This pattern is marked by a notable decline in price, followed by a minor rebound (or bounce), with a second decline occurring shortly after to a level that is either the same or similar to the first low, before a significant upward reversal takes place. As a result, the chart resembles the letter “W.”
The Double Bottom signifies strong support levels and often indicates a substantial trend change.
These patterns emerge during a downtrend and signal a reversal to the upside as the price breaks through the resistance line.
It is regarded as a bullish reversal chart pattern since the price holds a low twice and ultimately moves to a higher high.
The bounce between the two lows should be moderate.
The pattern is validated once the price surpasses the higher high established at the peak of the bounce between the two lows.
When this resistance level is breached, it confirms a bullish trend reversal.
However, premature breakouts can pose challenges in Double Bottoms, as they frequently occur depending on the shape of the bottom.
The Double Bottom, along with its counterpart, the Double Top, is one of the most easily recognizable chart patterns.
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