Universal Apparel and Textile Co. (DKGR)

[blowout]

According to Murphy, the double bottom is one of the most frequently seen and most easily recognized. However, analysts agree that this can be a difficult pattern to correctly identify. Investors must pay close attention to the volume during the formation of the pattern, the amount of increase between the two lows, and the time the pattern takes to develop on the chart.


Murphy explains that bottoming patterns may have smaller price ranges than topping patterns and often take longer to build. "For this reason, it is usually easier and less costly to identify and trade bottoms than to catch market tops."


It is quite common after prices reach a new low for a rebound in prices to occur. A retest of the low then usually follows. According to Bulkowski, a retest occurs when prices return to the low and test to see if the stock can support itself at that price level. "If it cannot, prices continue moving downward. Otherwise, the low usually becomes the end of the decline and rising prices result."