Double Bottom
To create a double bottom pattern, price begins in a downtrend, stops, and then reverses trend. However, the reversal to the upside is short-term. Price breaks again to the downside only to stop again and reverse direction upwards. With the second bottom of the double bottom pattern, it is usually more bullish if the second low is higher than the first low.
A potential buy signal is given when the confirmation line is penetrated to the upside. The confirmation line is drawn across the top of the double bottom pattern.
Often, after price penetrates the confirmation line, price will retrace for a short time, sometimes back to the confirmation line. This retracement offers a second chance to get into the market long.
Disclaimer - For educational purposes only
To create a double bottom pattern, price begins in a downtrend, stops, and then reverses trend. However, the reversal to the upside is short-term. Price breaks again to the downside only to stop again and reverse direction upwards. With the second bottom of the double bottom pattern, it is usually more bullish if the second low is higher than the first low.
A potential buy signal is given when the confirmation line is penetrated to the upside. The confirmation line is drawn across the top of the double bottom pattern.
Often, after price penetrates the confirmation line, price will retrace for a short time, sometimes back to the confirmation line. This retracement offers a second chance to get into the market long.
Disclaimer - For educational purposes only
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