Get started

Doublebottomreversal

Double Bottom- Full ExplanationA Double Bottom is considered a bullish signal, indicating a possible reversal of the current downtrend to a new uptrend. Sometimes called an "W" formation because of the pattern it creates on the chart, the Double Bottom is one of the most frequently seen and common of the patterns. The Double Bottom is a reversal pattern of an downtrend trend in a financial instrument's price. The Double Bottom marks an downtrend in the process of becoming a uptrend. A Double Bottom consists of two well-defined, sharp bottoms at approximately the same price level. The two bottoms are distinct and sharp . The pattern is complete when prices rise above the highest high in the formation. The highest high is called the "confirmation point". The bullish momentum may be evidenced through a higher bottom on an oscillator like RSI . Though not required, the market may break below the first low, even if briefly. A slight and temporary break below the first bottom is preferred as it may excite the bears only to reverse and trend higher. The neckline is formed between the price low of the valley between the two bottoms. A break above this neckline will confirm the double bottom pattern. The bullish confirmation is specified by a break in the key price resistance level (neckline) situated at the high point between the ‘bottoms’. Important Characteristics Following are important characteristics for a Double Top . Downtrend Preceding Double Top The Double Bottom is a reversal formation. It begins with prices in an downtrend. The trend downwards should be fairly long and healthy. Time between Bottoms Generally, the longer the time between the two bottoms, the more important the pattern is as a good reversal signal. Volume Volume tends to be heaviest during the first bottom and lighter on the second. It is common to see volume pick up again at the time of breakout. Pullback after Breakout A pullback after the breakout is usual for a Double Bottom. The higher the volume on the breakout, the higher the likelihood is for a pullback. Two Peaks at Different Levels Sometimes the two comprising a Double Bottom are not at exactly the same price level. This does not necessarily render the pattern invalid. Trading with Double Top: There are certain rules when trading with Double Bottom chart patterns. Firstly one should see the market phase whether it is up or down. As the double bottom is formed at the end of a downtrend , the prior trend should be an downtrend. Traders should spot if two rounding bottoms are forming and also note the size of the bottoms. Traders should only enter the long position when the price break out from the resistance level or the neckline. Example: From the below example of the 15 Min chart of BANKNIFTY we can see how bullish reversal takes places after the formation of the double bottom Stop Loss & Target : In the case of a Double Bottom chart pattern, the stop loss should be placed at the second bottom of the pattern and can be trailed at the pullback low as price moves higher but this will be a bit aggressive. The price target should be equal to the distance between the neckline and the bottoms. The False Break: How to trade the Double Bottom Pattern and profit from “trapped” traders Now… When you trade the Double Bottom, you must pay attention to the time and space between the lows — the larger the “gap”, the better. Why? Because when the lows are far apart, it gets the attention of more traders who could push the price higher. And with this concept, you can use it to profit from “trapped” traders. Here’s how… The first and second lows should have time and space between them Let the price break below the first low Wait for a rejection of lower prices and then go long The idea is simple. As the price breaks below the first low, bearish traders will short the markets and have their stops above the lows. But if the price quickly reverses higher, the short traders are “trapped”. And you can take advantage of it by going long, anticipating if the price moves higher, it’ll trigger their stops and push the market in your favor. Hope you all learnt from this post. Share with the community if you liked it. Regards Omahto
Editors' picks
NSE:BANKNIFTYEducation
by Omahto
17
ESTER |Ready for Next Leap of 50% after 10 Month Consolidation NSE:ESTER 10 Month Long Consolidation in range of 125-150 since April 2021. Double Bottom (Bullish Pattern) at 50% Fibonacci Retracement of previous swing high. Taking Support on 50Week SMA & Bouncing Back. Long Wicks Formation means Sellers unable to bring the stock down. Accumulate b/w 136 - 120 as Stock will gain more strength above 140 Targets : 162 - 180 - 200 - 232 SL : 110 Golden Cross Over Positive RSI Divergence in Weekly Monthly RSI >60
NSE:ESTERLong
by manuvsingh
CENTURYTEX : Very Good Risk Reward Swing Trade OpportunityNSE:CENTURYTEX has broken out range with good volume and has now retested the breakout level. The downside candles are narrow with less volumes indicating that bears are weak and bulls will take over. The Risk Reward is excellent at CMP. DISCLAIMER : This is not a call. The analysis shared is just for educational purpose. Please do your own analysis with proper risk management before taking your trade. Cheers! Happy Trading!
CLong
by TheAspiringTrader
What is Dounle Bottom Pattern?What is Double Bottom Pattern? The double bottom pattern looks like the letter "W". It indicates an trend and momentum reversal in a particular asset. It is best for analyzing the intermediate to longer-term view of a market. Double Bottom Pattern one of the most reliable reversal pattern after Head and Shoulders Pattern. How does Double Bottom Pattern Work? Double Bottom Pattern works in two phases: Phase 1: When the major trend is downtrend and forms the first down peak, then from the support the prices bounce to a new higher resistance and unable to break that resistance. Phase 2: When prices are not able to break the resistance it again goes to the same level and take support form similar levels forming second down peak also double bottom . Again due to demand the prices rises up to the resistance and break that resistance. Increase in volumes during breakouts further confirms the reversal move. This marks the completion of the pattern. Above Chart Explanation: This is the daily chart of EGLDUSDT here we can see in a downtrend prices take support and forms a down peak one and took support form there and bounce back to the above resistance. But prices were not able to break it instead prices got rejection from resistance and the prices again go down forming second down peak. After taking support prices bounces and break resistance due to heavy demand with great volumes. Usually traders enter on the breakouts and target the next resistance. Conclusion: Hence, the Double Bottom Pattern is great reversal pattern after Head and Shoulders Pattern. And it occurs quite often. Most of the traders use it on large time frames like 1D, 1W, 1M. Please let me know in the comments what do you think about Double Bottom Chart Pattern! Disclaimer: This is just an educational post never trade just any pattern. And please do your research before taking any trades. PS: We are publishing this for our Indian Audience again! Happy Trading !
Education
by Coinlog
7
Supreme Industries - Range Breakout- Fundamentally strong company - Breakout from a consolidated range showing a double bottom pattern - Buying pressure indicated by the long lower wicks - Breakout is supported by volumes, however it seems there is huge selling at 2130-2170 range but the net price change on the day is still +ve - Don't chase the stock as it might correct a bit and a good entry can be near 2130-2100 levels - Good for short term as well as medium term trading - Once 2200 level is crossed there might nice momentum
NSE:SUPREMEINDLong
by Soham-18
HINDUNILVR | At long time trendline supportHINDUNILVR | At long time trendline support, very important level and looks W Pattern to my eyes. CMP : 2026 SL : 1930 Target : 2400 Almost 1:4 risk reward (P.S : Have shared atleast 110+ charts in tradingview community and i used to put a google spread sheet link where i have the records analytics i post with the live status. But due to tradingview rule they removed all my charts all of a sudden. Hence i lost almost more than 65+ charts shared earlier. However i will continue to share the charts in future without link by abiding to the platform rules.) Those who wants to track those calls just message me through the platform.
NSE:HINDUNILVRLong
by srikartiram
8