Technical Analysis
Double Bottom
A bullish reversal pattern where price tests support twice and holds, signalling a shift from downtrend to uptrend.
Key rules
- Two troughs at approximately the same price level
- Second trough often on lower volume than the first
- Neckline breakout (above the bounce high) confirms the pattern
- Target = neckline + (neckline to trough distance)
- Pattern fails if price breaks below the double bottom lows
The double bottom is the bullish mirror of the double top. Price falls to a low, bounces to resistance (the neckline), declines again to approximately the same low, then breaks upward through the neckline to confirm the reversal.
**Structure** - First trough: initial low on high selling volume - Bounce: recovery to the neckline level - Second trough: retest of the low, often on lower volume - Neckline break: bullish confirmation
**Volume Pattern** The second trough ideally forms on lower volume, indicating sellers are exhausting. Volume should surge on the neckline breakout.
**Target** Measured move = distance from the lows to the neckline, projected upward from the neckline breakout.