Double Bottom

Bullish Reversal Intermediate

The Double Bottom is one of the most recognized bullish reversal patterns. Price reaches a low, bounces, drops to approximately the same low, then rallies — forming a distinctive "W" shape that signals the downtrend may be over.

Quick Summary

• What it looks like: Two troughs at roughly the same price level with a peak between them, forming a "W" shape. The peak between forms the neckline.
• What it means: Sellers pushed price to the same low twice but couldn't break through. The double defense shows a strong support floor where buyers step in.
• When it confirms: The pattern is confirmed when price breaks above the neckline (the high point between the two troughs). This is your signal that demand has overcome supply.

What It Looks Like

Two Troughs: Roughly equal lows show price hits a floor that sellers can't break.

Neckline: The resistance level between the troughs. A break above confirms the pattern.

The Story Behind the Pattern

1

First trough — panic selling

The stock drops to a new low. Fear is at its peak. But at this level, bargain hunters and value investors start buying, creating a bounce.

2

Bounce — hope returns

Price rallies to the neckline. Some traders think the bottom is in, but skeptics see this as a chance to sell. The rally stalls.

3

Second trough — the test passes

Price drops again but holds at the same support. This double test proves the floor is real. Buyers are more confident now — they've seen this level hold before.

4

Neckline break — confirmation

Price pushes above the neckline with conviction. Short sellers cover, sidelined buyers jump in, and the new uptrend begins.

How to Trade the Double Bottom

1

Wait for Neckline Break

Don't buy at the second trough hoping it's a Double Bottom. Wait for price to close above the neckline — that's your confirmation that the pattern is valid.

2

Measure the Target

The expected move up equals the height from the troughs to the neckline, projected above. If troughs are at $30 and neckline at $35, the target is $40.

3

Confirm with Volume

Volume should be higher on the breakout above the neckline than on the second trough. Rising volume confirms buyer conviction.

4

Set Stop Below the Troughs

If price falls below both troughs, the pattern has failed. Place your stop loss just below the second trough to protect your capital.

Technical Details

Pattern Name	Double Bottom
Pattern Type	Reversal (Bullish)
Formation	Two troughs at similar price levels with a peak between
Confirmation	Price breaks above the neckline (peak level)
Price Target	Height of pattern projected above neckline
Timeframe	Days to weeks (daily chart most common)
Reliability	High — mirror image of the Double Top, equally reliable
Volume	Should increase on breakout above neckline

Remember: A Double Bottom needs context — it should form after a meaningful downtrend. Two bounces in a sideways market aren't the same thing. Always confirm with volume and neckline break.

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