Good day everyone. Today I'll be discussing on the double bottom trend reversal pattern.
1. DEFINITION What is a Double Bottom? A double bottom pattern is a technical analysis charting pattern that describes a change in trend and a momentum reversal from prior leading price action. 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. The double bottom looks like the letter "W". The twice-touched low is considered a support level.
2. ENTRY The entry ( buy order) in double bottom pattern is placed just above the neckline resistance.
3. TARGET ( TAKE PROFIT) The target of a double bottom pattern = the distance of the bottom head to the neckline resistance. When a double bottom is spotted in a channel or rectangular pattern support. Your target should be the channel resistance and rectangular pattern resistance respectively.
4. STOP LOSS AND SETUP INVALIDATION The setup invalidation is a breakdown below the double bottom support. The stop loss is half the distance of the setup invalidation.
5.TRADE EXAMPLE I'll be using my analysis on BALUSDT as a trade example on double bottom. The trade played out as expected from my previous analysis. My buy entry β¬οΈ - breakout above the double bottom neckline resistance. My targets π― - previous swing high, ascending channel resistance. My setup invalidation β - breakdown below the double bottom support + ascending channel support. My stop loss π΄ - setup invalidation / 2.