In this post, we are going to tell you about How do You Trade? What is Double Bottom Pattern?
Advanced Double Bottom entry pattern
Besic of Double Bottom pattern
best entry and exit Double Bottom pattern
Double Bottom –
It is a bullish reversal pattern that appears after a defined downtrend and signifies a meaningful reversal on completion of the pattern.
This pattern is easy to spot on charts. It resembles with English letter ‘W’. This pattern shows that sellers have lost the battle and the price is likely to go up from hereon.
As seen in the chart on the previous page, this pattern is formed by two consecutive bottoms and a moderate rise between the two bottoms. The horizontal line drawn at the peak formed between the two bottoms is known as the neckline. The pattern is said to be complete only when the price breaks the neckline on the upside.
After a long bearish trend, the price falls to form a bottom and then retraces back to some extent to form a top. The price falls again to form a second bottom which is almost equal to the first bottom, before rising again to the neckline.
Support and Resistance Trading Strategy
Now, a long entry is taken once the price breaks the neckline on the upside.
The potential target for the pattern is normally calculated
above the neckline equal to the price difference between the
low point of the double bottom and the neckline.
Before the pattern neckline gets breached we normally see some consolidation happening before the breakout which will form a minor swing low and it will become the stop loss area for the pattern.
The pattern is considered to be more reliable if there is a significant rise in volume when the price breaks above the neckline.
Rounding Bottom –
It is a long-term bullish reversal pattern that appears after a defined downtrend and a long period of consolidation and signifies a meaningful reversal on completion of the pattern.
This pattern is easy to spot on charts. Because its appearance is similar to the bottom of a bowl or a saucer, the pattern is also known as a saucer bottom pattern.
This pattern shows that after a period of consolidation, sellers have lost the battle and price is likely to go up from hereon.
As seen in the chart above, this pattern is formed during a period of consolidation after a downtrend. During this period the fall in price is slowly arrested, a bottom is formed and then price slowly starts rising.
The horizontal line drawn across the top of the bearish and bullish sides of the rounding bottom pattern is known as the neckline. The pattern is said to be complete only when the price breaks the neckline on the upside.
Now, a long entry is taken once the price breaks the neckline on the upside.
