Lesson #48 What is Double Bottom? What Course Could Market Take After This Situation Occurs?

Double Bottom is yet another trend reversal situation just like the Double Top. Here, price fall creates valley like formations, however, soon prices rise only to fall and form another valley like formation or the bottoms. These two bottoms form the Double Bottom formation. And here the neck line is the top most point in between these two valleys.

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As you can see in the graph above the prices fell down to create a single bottom only to rise marginally again to fall down and create a double bottom. However, the second one could not reach the lowest level of prices as the first bottom.

This means that now buyers will win the battle. In order to brace yourself against this the change, you should place an order above the highest point in the neckline.

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As the above graph shows you after the situation of Double Bottoms is over and now the prices are beginning to rise quite smoothly. Therefore, when you have placed entry level price above the neckline price, you will benefit tremendously through it.

You must have noticed by now that the double bottom situation is just the exact opposite of the double top situation.