Double Bottom
Technical Analysis
What it means
A reversal pattern where price hits the same low twice and then rallies. It looks like a "W" and hints that the down trend has run out of sellers.
Example
A stock drops to $50, bounces to $58, falls back to $50, and rallies. Two bounces off $50 form a double bottom, hinting an up move may follow.
Mistake beginners make
Beginners buy the second bottom before confirmation. Wait for price to break above the $58 peak between the bottoms; buying early can mean catching a falling knife if $50 breaks.
Related terms
- Double Top — A reversal pattern where price hits the same high twice and then falls. It looks like an "…
- Chart Pattern — A recognizable shape formed by price over time that, based on history, hints at what price…