How to Trade With Double Bottom Chart Pattern

Chart patterns are the easiest and fastest way to predict the direction of price movements. Chart pattern is a set of habitual patterns of market participants that cannot be interrupted by news or rumors. In fact, chart patterns provide information faster than news. Chart pattern or chart pattern is a form of price movement that always repeats and signals the main signal, such as trend forwarding and reversal. As the basis for finding entry points, technical analysis methods with chart pattern techniques are considered as part of the mainstay forex trading strategy. Mastering the chart pattern technique is one of the abilities that can make it easier to process forex trading strategies without indicators.

Understanding Double Bottom

The double bottom pattern requires two lows to form near a similar horizontal price level and signal a potential bullish reversal signal. A measurable price strength will occur between two lows indicating some support at the low.

The double bottom chart pattern is found at the end of a downtrend and resembles the letter "W". Prices fell to new lows and then rallied slightly higher before returning to new lows. Unable to push the price to a new lower low to continue the downtrend, the sellers gave up and the price bounced sharply from this area. Bullish confirmation is determined by the break of the main price level located at the highs between the 'bottom' resistance levels (necklines).

Similarly, the double top pattern reciprocates the double bottom pattern which signals a bearish reversal. Instead of the confirmation shown on a break of a key resistance level, a double top occurs at the main support lows between the two highs. The double bottom and double top patterns are powerful technical tools used by traders in major financial markets including forex.

How to Identify a Double Bottom Pattern

A step-by-step guide to identifying the double bottom pattern on a chart:

  1. Identify two different bottoms with the same width and height
  2. The distance between the bottoms should not be too small - it depends on the time frame
  3. Confirm the neckline/resistance price level
  4. Use other technical indicators to support bullish double bottom signals such as moving averages and oscillators
  5. Beware of trading against a strong trend

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