Double Bottom

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DEFINITION of 'Double Bottom'

A charting pattern used in technical analysis. It describes the drop of a stock (or index), a rebound, another drop to the same (or similar) level as the original drop, and finally another rebound.

Double Bottom

INVESTOPEDIA EXPLAINS 'Double Bottom'

The double bottom looks like the letter "W". The twice touched low is considered a support level.

Most technical analysts believe that the advance off of the first bottom should be 10-20%. The second bottom should form within 3-4% of the previous low, and volume on the ensuing advance should increase.

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RELATED FAQS
  1. How are Rounding Bottom patterns interpreted by analysts and traders?

    Rounding bottom formations are commonly interpreted by traders and market analysts as slow-forming transformations from a ... Read Full Answer >>
  2. What is a common price target when identifying a double bottom?

    The double bottom pattern is one of the most common stock charts, formed when a stock price reaches two distinct lows resulting ... Read Full Answer >>
  3. What are common trading strategies used when identifying a double bottom

    A double bottom is formed when price falls to a new low, retraces upward some distance, turns back to the downside and stops ... Read Full Answer >>
  4. What does a double bottom tell a trader about the overall trend?

    A double bottom pattern is a W-shaped movement in a security's chart that, on the surface, reinforces the existence of a ... Read Full Answer >>
  5. How effective are double bottoms in spotting a change in direction of the overall ...

    Double bottom price patterns are one of the most important formations for technical traders to be able to recognize. Double ... Read Full Answer >>
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