Intense

Double Bottom Pattern

Double Bottom Pattern : The double bottom chart pattern is the type of a bullish reversal trading chart. When the second low is formed trend will need a permanent reverse into bullish momentum. The trend is confirmed when the bullish trend breaks through the neckline level and continues in the upward direction. Double tops and bottoms are called chart patterns used to signify a reversal from the prevailing trend. Double tops and bottoms include what they tell traders and how to trade by using them. It is also called a technical analysis chart. It describes the change in trend and momentum reversal from leading price action. The double bottom represents as ‘W’. The chart will follow a major/minor downtrend in security, and signal as the reversal beginning of a potential uptrend. This pattern will analyze the intermediate to long-term market. The longer the duration between the two lows in the pattern has the great probability that the chart will be successful.

Three-month duration is considered for the lows of double bottom chart pattern to yield a great probability of success. It is best to use daily/weekly data price charts when analyzing the market for a particular pattern. It appears on the intraday price chart as it is difficult to ascertain the validity of the double bottom pattern when the intraday data price chart is used. The strategy offers a method to determine your profit objectives and hide your protective stop loss. Here you have to be patient and wait for the trade setup to develop. Trading the double bottom breakout will have three prevailing bearish trends. Two equal bottoms are at the support level and candlestick breakout of the neckline. The Double top patterns are the opposite of double top patterns. It is formed by two consecutive rounding tops so the first rounding top will form an upside-down U pattern. The rounding tops indicator for a bearish reversal occurs after the extended bullish rally. The Double tops will have the same inferences.

Why is the Double Bottom chart Pattern Important?

The double bottom pattern has signals that an investor gives the opportunity to enter the market with a bullish trade. There is critical support on the downside that prevents stock from dipping past the resistance level and is setting up for an upward move. So as the double bottom pattern is identified trader may initiate a timed bullish investment to make quick profits. So if they are incorrect about the movement and stock breaches the lower support level they can get out for a small loss.

Attributes

Pattern type :The Double bottom pattern is of Reversal type

The indication : The indication is Bullish

Breakout Confirmation : The confirmation for the pattern is a close and above the upper trend line drawn horizontally across the intervening high between lows with above-average volume.

Measuring : Takes the distance between two low and high. Then add it to breakout level.

Volume : It declines at time of formation and increases the breakout.

Conclusion

The pattern is useful when it is correctly identified. Traders should keep an eye on volume to ensure as increasing throughout the pattern. The key to ensure all elements of the pattern are identified correctly before jumping in and executing a trade. So to learn more about stock chart patterns and take advantage of technical analysis to the fullest be sure to check the library of predictable chart patterns. It includes a comprehensive description and image to recognize chart patterns scenarios and become good trader.