What Does a Double Bottoms Chart Pattern Mean?

Double bottoms pattern is a reversal setup that is formed after an extended downwards trend.

Double bottoms chart pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak between the 2 troughs.

The buy signal from this double bottoms chart pattern market bottoming out signal forms when the market breaks-out the neckline to the upside.

In Gold, the double bottom pattern is an early warning signal that the bearish trend is about to reverse.

Double Bottoms Pattern is only considered complete/confirmed once the neckline is broken.

In this double bottoms chart patterns formation the neckline is the resistance level for the price. Once this resistance is broken the market will move up.

Summary:

• Double bottom chart pattern forms after an extended move downwards - downwards trend
• This Double bottoms chart pattern formation indicates that there will be a reversal in the market
• We buy when price breaks-out above neck line: as described on the example shown and explained below.

What Does a Double Bottom Pattern Mean?

The double bottom chart pattern look like a W Shape chart pattern, the best reversal signal is where second bottom is higher than the first bottom as shown below.

This means that the reversal signal from the double bottom pattern can be confirmed by drawing an upward trendline as shown below. If one opens a buy signal the stop loss will be placed just below this upward trend line.

What Does a Double Bottom Chart Pattern Mean? - What Happens to Price Action After a Double Bottoms Chart Pattern in Gold Trading