How to recognize the double bottom pattern?
When analyzing market trends while trading, traders rely on charts. Among the chart patterns encountered, there is one that stands out from the rest. It is the classic double bottom pattern. If you are not familiar with this chart, learn how to recognize it here.
Double bottom chart pattern
Also known as the double bottom pattern, it transcribes the change in trend and a reversal in momentum from the previous price action. To view other similar articles, hop over to here. It allows you to see a price decline, a rebound, another decline to the same level or close to the original decline, and then another rebound. The Reverse Double Bottom is a bullish reversal pattern most often found on line charts, bar charts and candlestick charts. As the name implies, the chart shows two nearly equal consecutive lows, with a moderate peak in the middle. This action pattern indicates the level in the market where demand exceeds supply twice in a very short period of time.
Identify the Double Bottom chart pattern
The reversal consists of two similar consecutive bottoms. This differs largely from the double top breakout because the patterns are long trades. The first appears when the downtrend finds support. Then the price retraces until it finds a resistance level which is called the neckline. In the second phase, the price moves down to the support created early by the first peak without managing to break it but instead rallies to the neckline. There are three parts: First lower: The market bounces higher and forms an oscillating low. This is probably a retracement in a downtrend. Second low: The market rejects the previous low. At this point, there is buying pressure, but it is too early to rule on whether the market could continue to rise. Neckline breakout: price is above resistance and signals that buyers are in control. The market is likely to move higher.