Double Bottom - Reversal Chart Pattern

April 16, 2008 by admin

Double Bottom Definition

A double bottom is a chart pattern with two bottoms very close in price. This pattern can be seen in all time-frames. There are a few requirements to classify a chart pattern as a double bottom:

Two lows that are near equal in price
Equal distance in terms of time between lows
Volume decreases on the second bottom

Double bottoms have an enormous amount of "cause" or breakout potential as the price of the stock has moved back in forth within a defined range. So, when the stock finally breaks out, there is an expansion in volume and price movement. Breakouts can occur to both the upside and downside. If you enter a breakout of a double bottom pattern, you will want to keep a close stop above/below the support/resistance level.

Double Bottom Price Target

When a stock breaks out of a double bottom formation, the price target is the range of the formation added to the breakout level.

Double Bottom Breakout

Double Bottom Breakout

Double Bottom Breakdown

Double Bottom Breakdown

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