• Vasily Trader

Learn How to Trade Double Bottom Formation | Full Guide 📚

Updated: Feb 3

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!