Double bottom

bullish · reversal pattern · also: W-bottom

The double-bottom is the bullish counterpart to the double-top: two consecutive troughs at approximately the same low, separated by a moderate rally. Confirmation comes on a close above the intervening high. Volume should expand on the breakout.

Formation rules

Prior trend is down
Two troughs within ~3% of each other
Volume contracts at the second trough, expands on breakout
Confirmation: close above the intervening high

How to trade it

Buy on confirmed breakout above the intervening high. Stop below the second trough. Measured target = height between troughs and breakout level, projected above. Combined with a positive RSI divergence between the two troughs, the pattern is one of the higher-reliability bullish reversals.

Common pitfalls

Without volume on the breakout, failure rates rise sharply
In a primary downtrend, double bottoms frequently morph into triple bottoms or fail entirely

Statistical context

Bulkowski: ~68% reach the measured target with volume confirmation. RSI divergence between the two troughs further improves the edge.

Related patterns

Pergunte ao Drogo: