Double Bottom Pattern

A Double-bottom is a reversal pattern that tends to occur during severe market sell-offs, as in the example below of the chart for Qantas when it was at its most down trodden. The pattern acts as a major reversal signal that forms after just such an extended downtrend. Although the 2006 Qantas chart is a daily chart that shows a double bottom forming over 4 weeks, It should be noted that a double bottom is best in a weekly pattern that forms over a few weeks to many months, with the preferred period being 1-3 months.

As its name implies, the pattern is made up of two consecutive troughs that are fairly equal, with a defined peak between them. Although there can be variations, along with many potential double bottoms during an extended down trend, the 'text book' double bottom usually marks an intermediate or long-term change in trend. It is important to note that the reversal pattern is not confirmed until the key resistance or neckline is broken, as shown in the QAN chart. This confirmed a change in the trend. In the Double Bottom pattern, the initial trough can look like a continuation of the downtrend.

Please click here to view a Triple Top and Bottom pattern overview.