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Great site Kenny.

Technical Analysis written in a straightforward way so that everyone understands.

There's only a small few who get it consistantly correct and you are certainly in that group. Chris

Thanks for putting this all together and sharing! BHW

Awesome Stuff! Kenny has shown time and time again the ability to show us direction in these markets. Khalsa

Kenny, I appreciate your insight and analysis. You make sense of what I can rarely see.

Thanks for sharing.

Took a gold short at 1240 just closed at 1203 :-)))))))))))))))))) ........ top call!!  Gekko

Double Bottom Pattern

Stock Chart Patterns

The Double Bottom Pattern

A Double Bottom pattern (DB) is one of the common stock chart patterns that are often found in stock market technical analysis charts. It is a bullish reversal chart pattern that is found at market bottoms.

The Double Bottom is one of the most reliable stock chart patterns found in technical analysis charts. It is a straight forward pattern defined by two clear lows where the market prices have found a bottom at around the same price level. A common variation of the Double Bottom is the triple bottom pattern.

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Stock Chart Patterns Recognition

The first low is created when the markets prices rise in a consolidation following a clear trending phase in the market. Prices then fall again to a around the level of the first bottom but buyers fail to gain enough momentum to push prices down through the support. Prices can fall slightly short or slightly exceed the previous low but as long as it bottoms at around the same price level it is quite normal. Either way, it should be on lower volume..

As prices rise again buyers gain control and volume increases. The Double Bottom Pattern is created when prices break up through the level of the previous consolidation high and this should be broken on high volume.

The Double Bottom Backtest

In a normal market, price will usually fall back to backtest the validity of the break up through resistance. This back test should be on much lower volume. On rare occasions, it may not do a backtest if the market is very strong.

Double Bottom Volume Confirmation

  • 2nd low - lower volume
  • Subsequent rise - high volume
  • Break - high volume
  • Backtest - low volume

Example of a double bottom pattern in stock chart
Double Bottom Pattern

Double Bottom Price Targets

A valid Double Bottom produces a measured move so we can find a price target by calculating the vertical depth of the consolidation zone, and then measuring an equal distance above.   

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Double Bottom Stop Loss

An Double Bottom fails and is not consdidered valid if prices break back below the bottom before hitting its price target. If prices are accepted back down into the bottoming zone once it has broken up through resistance, it is a sign that  the chart pattern is severely weakened and the odds that it is a valid Double Bottom pattern are reduced.

Triple Bottom Pattern

The Triple Bottom pattern is a variation of the Double Bottom chart Patterns and they come in to play where prices do not break the level of the previous low, but instead finds further support and prices rapidly rises back back up through the resistance zone at the upper end of the chart pattern. The speed of this move can often find traders on the wrong side of the markets due to the sharpness of the turnaround.

This creates a high value trading opportunity as in our experience there is no such thing as a quadruple bottom, it just does not happen. Prices must now be seen to move higher quite swiftly. This is a sign that the buyers have committed themselves and that bears are being stopped out.

If prices were to fail again they will almost certainly break the low of the newly formed triple bottom pattern.

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