Learn How to Trade Double Bottom Formation | Full Guide 📚

24 Jul 2021

Hey traders,

If you are learning price action trading, you definitely must know a double bottom pattern.

Double bottom is a reversal pattern.
It is applied to spot early market reversal clues and catch the initiation of a new bullish trend.

Preconditions for a double bottom:
1️⃣ The market must trade in a bearish trend.
2️⃣ After a formation of the last lower high, the price must set equal low.
3️⃣ The price must return back to the last lower high level.

✅Once these conditions are met the pattern is considered to be completed.

The formation of the pattern is considered to be a ⚠️WARNING sign.
Even though many traders buy the pattern once it is completed,
for me it is not enough.
❗️Remember that the price can easily start to consolidate and form a horizontal channel for example.

The trigger that we will look for is the breakout (candle close above) the last lower high level (based on a wick and its highest candle close) - the neckline.
Being broken to the upside, the market sets a new higher high.
It signifies a violation of a current bearish trend.

⬆️Attempting to catch an initiation of a bullish trend, we will buy the market with a buy limit order on a retest of a broken neckline.

❌Safest stop will lie below the lows of the pattern.

💰Your reward must be at least 1.5 of your risk.

Following these simple rules, you will be impressed by how accurate this pattern is!

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