What is a Double Bottom Pattern?

What is a Double Bottom?

A double bottom is a bullish reversal pattern where price tests the same support level twice, fails to break lower both times, and then rallies through resistance to confirm a trend change. The pattern signals that sellers have exhausted and buyers have accumulated positions, setting up a potential uptrend.

Structure

• Two swing lows: Price forms two distinct lows at approximately the same level, separated by a rally between them
• Neckline resistance: The interim high creates a resistance level that must be broken to confirm the pattern
• Volume expansion: Breakouts above the neckline typically show increasing participation and conviction
• Measured move: Target equals the pattern height (low to neckline) projected upward from breakout

Validation Checklist

• Confirm a clear downtrend preceded the pattern—reversals need something to reverse
• Look for bullish divergence on oscillators at the second low, showing momentum shifting
• Wait for decisive neckline breakout with expanding volume
• Consider entering on breakout or retest of broken neckline as new support
• Manage targets around former resistance zones and use trailing stops

Advanced Guidance

Build a repeatable, rules‑based process so decisions are consistent across sessions and instruments. Start from context (higher‑timeframe structure, positioning, macro tone), then define precise triggers and invalidation on execution charts. Track spread and depth so your order type matches conditions. Pre‑compute scenarios (breakout, fakeout, mean‑revert) and map actions for each to reduce hesitation.

Execution Framework

• Plan entries at levels with confluence (structure, momentum, time‑of‑day).
• Place stops beyond the logical invalidation, not arbitrary distances.
• Target at least 2–3R; scale out methodically and trail remainder.
• Avoid thin liquidity windows unless the setup explicitly requires it.
• Record slippage and spreads; poor fills can erase edge.

Review Loop

• Journal setups by session and pair to learn where they excel.
• Tag trades by catalyst (news, trend continuation, range breakout).
• Recalculate expectancy monthly; prune underperforming variants.

Risk Controls

Keep daily loss limits, reduce size after consecutive losses, and pause during regime shifts. Survival enables compounding; treat discipline and execution quality as part of your edge.