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Double Bottom Patterns

A very powerful pattern in trading. If you add two more legs to the V shape then you get a triple bottom. Triple bottoms are rare, but even more powerful than a double bottom.

A double bottom formation looks like a W. For swing traders, the pattern usually forms on a daily chart when the stock is basing, or bottoming.

After the double bottom completes its shape, the stock should pull back slightly, then move sideways for a few days. The longer it consolidates the more powerful the breakout. Below is what a double bottom formation looks like:



It is important to remember that the double bottom is an intermediate to long-term reversal pattern that will not form in a few days. Even though formation in a few weeks is possible, it is preferable to have at least 4 weeks between lows. Bottoms usually take longer than tops to form and patience can often be a virtue. Give the pattern time to develop and look for the proper clues. The advance off of the first trough should be 10-20%. The second trough should form a low within 3% of the previous low and volume on the ensuing advance should increase. Volume indicators such as Chaikin Money Flow, OBV and Accumulation/Distribution can be used to look for signs of buying pressure. Just as with the double top, it is paramount to wait for the resistance breakout. The formation is not complete until the previous reaction high is taken out.