How the pattern forms?
✍Double bottom is an intermediate to long-term reversal pattern that can takes a few candles to form.
✍The trend reversal says itself there should be predefined trend before the pattern forms.
✍Even though formation in a few candles is possible, it is preferable to have at least 4 to 5 weeks minimum between lows in a medium term.
✍Double bottoms usually take longer than double tops to form and patience can often be a virtue.
✍A bottom is established and the neckline breaks, and then the pullback happens, which can act as a support for price.
✍After a few weeks or months, the prices fall back to the previously established support, and form a double bottom, to rise again from these levels.
✍A letter "W" like formation is completed, and the stock can even surpass the previous resistances depending on the movement of index at that time.
✍Once double bottom was established, second positive breakout was witnessed when the prices crossed the second resistance level.
How to trade the double bottom?
✍The double bottom pattern should be traded on long or buy side on the end of downtrend or correction.
✍The trade has to taken once the neckline is crossed and the breakout happens and the confirmation takes place.
✍The stop loss of the trade has to be put on low of pattern and target on the resistance level of price.
✍The stoploss can be shifted upside once the higher low starts to form in an uptrend.
✍Every pattern depends on "higher tops, higher lows" & "lower tops, lower lows". Double bottom is based on the once the higher high breaks and the uptrend starts.
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