A Double Bottom is a chart pattern where the price holds a low two times and fails to break down lower during the second attempt, and instead continues higher.
The pattern is characterized by a distinct drop in price, followed by a slight reversal (or bounce) with a second drop occurring soon after to either the same or similar level as the first before another, significant reversal so that the chart appears to take on the form of the letter “W“.
The Double Bottom reflects very strong levels of support and often indicates a strong change of trend.
The bounce between the two lows should be moderate.
The pattern is confirmed once the price reaches a higher high than the top of the bounce between the two lows.
Premature breakouts can be a problem in Double Bottoms as they occur frequently, depending on the bottom shape.