Double Bottom Candlestick Pattern

A common chart pattern is the so-called “double bottom.” This is exactly what you would think it would be, simply a matter of the market not being able to break down below the same area twice. This essentially means that it has formed a “bottom” on price. There is a significant amount of support in this area, and quite often this will lead to a trend change.

Double bottoms appear quite often, but the ones that are going to be most important to your trading will be on the higher time frames. A double bottom on a short-term chart such as a one minute or five minute chart can simply be noise, but one that appears on a weekly chart means that there is a significant amount of buyer interest at that particular region.

Double Bottom Formation

Double Bottom Formation

Trading a double bottom isn’t as clear cut as some other patterns, is more or less just a realization that the market is having trouble getting below a certain price. It comes down to how aggressive you want to be, but some people will trade one as soon as they see signs of support. As you can see on the chart attached, we formed a double bottom and then shot straight up. This was on the weekly timeframe, so the fact that we could not get below that price truly showed signs of massive buying interest and pressure. With this, the trend reversed, and the markets took off to the upside for the long-term.

Double Bottom in action.

Double Bottom in action.

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