How to Analyze Double Bottoms Chart Pattern

How Do You Analyze Double Bottoms Chart Pattern?

To learn how to analyze and trade using double bottoms chart pattern a trader will first of all need to learn double bottoms pattern analysis explained below.

Double Bottom Pattern

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

Double bottom xauusd pattern is made up of two consecutive price troughs which are roughly equal - with a moderate peak in between the two price troughs.

Double bottom xauusd pattern is considered complete once price makes the second low and then penetrates the highest price point between the price lows - this highest price point between the trading troughs is called the neck-line.

Buy signal from double bottom chart pattern is generated when price breaks above the neckline to the upside.

In the double bottoms chart pattern is an early warning signal that the downward trend might reverse.

Double bottom pattern is only considered confirmed once the neckline is broken - in double bottom pattern the neckline is the resistance level for the price. Once this resistance level is broken by the price will then move up.

Summary: How Do You Interpret Double Bottoms Chart Pattern?

• Double bottom chart pattern is formed after an extended downwards trend move
• Double bottoms chart pattern signals that there will be a reversal in the trend
• XAUUSD traders will buy when the price breaks-out above neckline: as described on the double bottoms chart pattern example illustrated below.

Interpret Double Bottom Chart Pattern

The double bottom pattern look like a W Shape pattern, the best double bottoms chart pattern reversal xauusd signal is where the second price bottom is higher than the first price bottom as shown on the example illustrated below.

This means that the reversal xauusd signal from the double bottom pattern can be confirmed by drawing an upward trend line as shown on the double bottoms chart pattern example shown below. If a trader opens a buy trade the stop loss order will be placed just below this upwards trend line.

How Do I Analyze Double Bottoms Chart Pattern - How to Trade Double Bottoms Chart Pattern?

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