Trading chart patters Bullish Reversal Signals How to Trade the Double Bottom Chart Pattern Double Bottom Share Tweet +1 SHARES 13 Do you know how to trade the double bottom chart pattern? Many traders overlook this profitable price action trading pattern because they don't know how to trade it properly. In this addition to
my free price action course, I'm going to show you a few profitable ways to trade the double bottom chart pattern. There are many ways to trade this chart pattern, but in this article, I want to focus on three profitable techniques that I have used to trade the double bottom chart pattern. I'm also going to show you which technique I prefer to use, and why I don't trade the traditional techniques for this pattern anymore. By the end of this article, you should be able to identify and trade good double bottom chart patterns. After you learn how to properly trade the double bottom, it may become one of your favorite price action chart patterns. What is a Double Bottom Chart Pattern? A double bottom chart pattern is a strong bullish price action signal that occurs at the end of a downtrend. It happens when an equal, or almost equal, low forms during a downtrend, instead of another lower low. The idea behind the pattern is that failure to make another lower low could be a signal of momentum leaving the trend. The first low in the pattern becomes support that provides a strong bounce for the second, equal low. Middle Peak Target Support i
As you can see from the image above, a second horizontal line is also drawn at the middle peak. This is the traditional breakout point of the double bottom chart pattern. I'm going to refer to this line as the breakout line. To get your profit target, you measure from the support line to the middle peak (or breakout line). Then you take that measurement and duplicate it upward, starting from the breakout level. Note: There is no ascending or descending version of this pattern, unlike the head and shoulders chart pattern. All of your important levels (other than the main trendline) will be drawn horizontally only. Trading the Double Bottom Chart Pattern Starting with the standard way to trade the double bottom, your entry is taken after price breaks the breakout line. Most traders opt to wait for a candlestick to close above the breakout line to enter. Your stop loss is placed under the most recent low. Note: As you can see in the example below, waiting for a close above the breakout line would have resulted in a missed opportunity. Often there is a pullback to the breakout line, but in this case, it did not happen. Take Profit Entry Stop Loss