Trade Stock Indices

Technical Analysis of Double Bottoms Setups

How to Analyze Double Bottoms Setups

To learn and know how to analyze the market using double bottoms stock chart patterns a indices trader should first of all learn the technical analysis of double bottoms stock chart pattern explained in this tutorial.

Double Bottoms Pattern

Double bottoms setup is a reversal indices pattern which forms after an extended downwards trend.

Double bottoms stock chart pattern is made up of 2 consecutive troughs which are roughly equal, with a moderate peak between the 2 troughs.

Double bottoms stock chart patterns setup is considered complete once stock price makes the second low & then penetrates highest point between the lows, called the neck-line.

The buy signal from this double bottom market bottoming out signal happens when the market breaks-out the neck-line to the up-side.

In Indices, the double bottom indices pattern is an early warning signal that the bearish trend is ready to reverse.

Double Bottoms Setup is only considered confirmed once the neck line is broken. In this double bottoms stock chart patterns formation and occurrence the neckline is the resistance area for the market price. Once this resistance is breached and broken the market will move upwards.

Summary:

  • Double bottom stock chart pattern forms after an extended move downwards - indices downwards trend
  • This Double bottoms stock chart pattern formation shows that there'll be a reversal in stock market
  • We buy when stock price breaks out above neck-line: as elaborated on the illustration illustrated below.

Double Bottoms Trading Chart Setups - Index Trade a Double Bottoms Index Setup

Technical Analysis of Double Bottom Patterns?

The double bottom indices pattern setup look like a W-Shape stock chart pattern, the best reversal signal is where second bottom is higher than the first bottom as illustrated & shown below.

This means the reversal indices signal from the double bottom stock chart pattern can be confirmed by drawing an upward trend line as illustrated below. If a indices trader opens a buy trade signal the stop loss order will be placed just below this upwards trend-line.

Double Bottoms Chart Setups - Index Trade a Double Bottoms Index Setup

How Do I Analyze Double Bottoms Setups

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