The double bottom pattern is a reversal pattern that signifies a potential shift from a downtrend to an uptrend. It is characterised by two distinct troughs (bottoms) on a price chart. The pattern is typically observed after a sustained downtrend and indicates that the security may be due for an upward reversal.
What is double bottom pattern
A double bottom pattern is a common technical analysis chart formation that signals a potential trend reversal from a downtrend to an uptrend. It's characterized by two consecutive lows at roughly the same price level, followed by a rebound. The formation resembles the letter "W".
The second low acts as a strong support level, indicating that the downward pressure has eased and the market is likely to move higher. Once the price breaks above the neckline (a horizontal line connecting the two troughs), it confirms the reversal and a potential uptrend.