Double Bottom
A reversal pattern that forms at the end of a downtrend, when price makes two troughs at roughly the same level. It completes when price rises above the neckline drawn through the peak between the troughs. It can signal that price failed to break below the same level twice and that the downtrend is losing strength.
How it forms
- Prior downtrend. The pattern is a reversal signal. It needs a clear downtrend before it.
- First trough. Price makes a new low, then recovers clearly to a peak.
- The peak between. The recovery is a visible move, not a small wobble. A figure often quoted for daily charts is a rise of about 10% or more from the trough. On lower timeframes it can be smaller.
- Second trough. Price falls again and stops near the first trough. The two troughs are usually within about 3% of each other. They are separated by a clear stretch of time, not just a few candles.
- Neckline. A horizontal line through the highest point of the peak between the troughs.
- Completion. The pattern is complete when price closes above the neckline. Until then, two troughs are only a possibility.
The figures are approximate. They are commonly accepted textbook values, not hard limits.
What it suggests
At the first trough, buyers push price back up. On the second drop, price reaches the same level but cannot get below it. This can show that buying interest is still there and that sellers lack the strength for a new low. A break above the peak suggests that sellers' last line of defence has been cleared.
In a downtrend, price often returns to a previous low and bounces. That alone is not a double bottom. The pattern only means something once the neckline breaks upwards. Before that, price can fall below the troughs and the downtrend can carry on.
When it strengthens, when it weakens
Strengthens
- Both troughs forming in the same support zone
- Lower selling volume on the second trough than on the first
- A clear rise in volume as the neckline breaks
- A clear gap in time and a strong recovery between the troughs
- Forming on a higher timeframe (4H, 1D)
Weakens
- No clear downtrend before the pattern
- Troughs forming very close together in time
- A very low peak between the troughs
- The break coming on low volume
- A strong resistance zone just above the neckline
The MarketLevelMap view
How it relates to zones
A double bottom is a zone pattern by nature: price drops to the same area twice and turns up twice. Its link to zones is read in three places:
- If both troughs fall in a support zone, the pattern shows that zone being defended a second time. The troughs need not be at exactly the same price; it is enough that both sit inside the same zone.
- If the peak between them lines up with a resistance zone, a break of the neckline also means that zone is cleared. This gives the break more weight.
- The first resistance zone above the break is a more realistic reference than the measured move for where price may react again.
After the break, price sometimes returns to retest the neckline from above. The zone that was resistance may now act as support. If price closes back below the neckline in this test and stays there, the break is considered to have weakened.
When it completes
Close above the neckline (the peak between the troughs).
When it is invalidated
Before completion: If price closes below both troughs without breaking the neckline, the pattern is considered not to have formed. The troughs then become a level that has been lost, not support.
After completion: Even after a close above the neckline, if price drops back below it and closes below the second trough, the bullish scenario is considered invalid.
Often confused with
- Inverse Head and ShouldersThere is a deeper middle trough (the head) with a shoulder on each side.
- Triple BottomThree troughs form at the same level instead of two.
- RectanglePrice moves between two flat levels, and the direction of the break is not known in advance.
For general information only. Not investment advice.Last updated: