A double bottom is a bullish reversal chart pattern that forms when price makes two consecutive lows at roughly the same level, with a moderate rally between them. It signals that sellers attempted twice to push lower but failed—the downtrend is losing momentum. The pattern completes when price breaks above the neckline.
- Two lows at similar price levels forming “W” shape
- Bullish reversal pattern after downtrends
- Confirmed only when neckline breaks
How Double Bottom Forms
The pattern shows failed breakdown attempts:
Double Bottom Formation:
Neckline
---- /\ /----
\ / \ /
\ / \ /
\ / \ /
* \ /
Low 1 *
Low 2
Timeline:
1. Downtrend reaches Low 1
2. Bounce to neckline
3. Decline to Low 2 (fails to exceed Low 1)
4. Rally to neckline
5. Break above neckline = Pattern confirmed
Quick Reference: Double Bottom Trading
| Element | Description |
|---|---|
| Low 1 | First low after downtrend |
| Low 2 | Second low, similar level |
| Neckline | Resistance between lows |
| Entry | Break above neckline |
| Stop | Below Low 2 |
| Target | Neckline plus pattern height |
Example: Trading Double Bottom
Double Bottom Trade:
| Phase | Price | Action |
|---|---|---|
| Low 1 | ₹80 | First low |
| Neckline | ₹90 | Bounce |
| Low 2 | ₹82 | Second low (higher) |
| Break | ₹92 | Neckline breaks, BUY |
| Stop | ₹78 | Below lows |
| Target | ₹102 | Height (₹10) above neckline |
A double bottom forms when price makes two lows at similar levels, creating a “W” shape. It signals sellers failed twice to push lower. The pattern confirms when price breaks the neckline. Trade the breakout with stop below the lows.
Double Bottom Criteria
Valid Pattern
- Clear downtrend before pattern
- Two distinct lows at similar level
- Moderate rally between lows
- Lows separated by meaningful time
- Neckline break confirms
Stronger Patterns
- Lows at round number support
- Volume higher on second low (accumulation)
- RSI divergence (higher low on second bottom)
- Longer time between lows
Trading Strategy
Entry Options
- Break above neckline (aggressive)
- Retest of broken neckline (conservative)
- After confirmation candle
Stop Placement
- Below the second low
- Or below both lows for safety
Target Calculation
- Measure pattern height (neckline to low)
- Project upward from neckline break
Common Mistakes
-
Trading before confirmation – Many double bottoms fail. Wait for neckline break.
-
Lows too close – Need meaningful time between lows for valid pattern.
-
Ignoring volume – Increasing volume on breakout confirms pattern.
-
Premature entry – “It looks like a double bottom” isn’t confirmation.
How JournalPlus Tracks Patterns
JournalPlus lets you tag double bottom patterns at entry, tracking your success rate on this specific chart pattern.
