Double Bottom / W Bottom
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
A reversal pattern that forms two valleys at approximately the same price level near the end of a downtrend. The second valley fails to break below the first, and an upward breakout through the neckline completes the pattern. Its shape resembles the letter 'W'.
Enter long when price clearly breaks above the neckline on a closing basis. Waiting for a retest (pullback to the neckline) provides greater certainty.
Project the distance from the neckline to the valley lows upward from the neckline breakout point. For example: neckline at 1000, valley at 900, target is 1100.
Place a stop-loss slightly below the second valley's low (1-3% below). If entering after a neckline retest, it can also be placed slightly below the neckline.
Ideally, high volume at the first valley, decreasing at the peak, and lower volume at the second valley compared to the first. A volume surge at the neckline breakout enhances reliability.