Double Bottom Chart Pattern

 
If you are a pro Forex trader, you would certainly know a lot of information on the double bottom chart pattern. In this case, Double Bottom is a high potential chart pattern which is significantly taught in Forex training. Moreover this is one of the best and successful patterns that are being followed by many successful Forex traders. This chart pattern looks very similar like the alphabet ‘W’. Expert Forex traders most usually expect the rate to be in down trend making a BOTTOM. It will slightly rally up while it is sold down with the previous bottom. We can say that this figure is the opposite of the Double Top pattern

Forex traders generally look around for a fair increase when the rate hit the resistance. For giving you a better idea in this regards, here is an example for reference: Just consider when the rate drops down from £10 to the least of £2 during the 1st bottom, here the £2 buyers explore the market and drive-up the rate at least for £5, where the sellers disdain the £5 level and trade the market again to £2. At this point, the rate of the 2nd bottom remaining with £2, the buyers find it easier to get at £2 and further escalate the market again to £5. During this point after minor conviction, they will be able to push the rate to £5 again.
Generally, the double bottoms appears while the rate falls down and further bounces up and then falls down for the 2nd time in order to equalize the 1st drop. This is why experts compare this chart with the alphabet W. In most of the cases, the 2nd bounce in the rate will usually be lesser compared to the first one. The 2nd chance of buying will get its peak which will be lesser than the 1st one. If the 2nd peak reaches, buying gets its end and now selling starts. This entails the 2nd leg of M pattern.

General Features of the Doble Bottom Pattern

Classic Doble Bottom pattern

 

  • The double bottom pattern appears when the market is bearish.
  • Once finished, this formation involves a corrective phase upward, ie a change in the trend from bearish to bullish.
  • It is a figure that is commonly seen in the market indicating turnaround phases.
  • Like the double top pattern it is quite reliable, meaning that the trader can use this formation as an indication for a possible change in trend.
  • However, the double bottom should be used in conjuntion with other market analysis tools to ensure the reliability of the signal.

Example of Double Bottom Pattern

 


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