Key Takeaways (TL;DR)
• A Double Bottom is a bullish reversal pattern that forms after a downtrend—it looks like the letter "W". • The pattern shows sellers failed twice at the same price level, indicating strong support. • Entry comes after the breakout above the neckline, not at the second bottom. • Profit target is calculated by measuring the pattern height and projecting it upward from the neckline.
The Hook
You are staring at a chart. The market has been falling for weeks. Red candle after red candle. Fear is everywhere.
Then something strange happens: The price hits a certain level... and bounces. It rallies for a bit, comes back down, hits the same level again—and bounces once more.
Congratulations. You have just spotted one of the most reliable patterns in trading: The Double Bottom.
What is a Double Bottom?
A Double Bottom is a bullish reversal pattern that signals the end of a downtrend. It gets its name from the shape it creates on the chart—two distinct low points at roughly the same price, forming a "W" shape.
The psychology behind it is simple: Sellers tried twice to push the price lower, and failed both times.
When buyers defend a price level so aggressively that sellers give up, it is a powerful signal that the trend is about to reverse.
The Anatomy of the Pattern
There are four key components to a valid Double Bottom:
1. Prior Downtrend
This is a reversal pattern. It reverses something. Without a prior downtrend, there is nothing to reverse. This is non-negotiable.
2. First Bottom (The "V")
The initial bounce. Sellers push the price to a new low, but buyers step in aggressively, creating a sharp, V-shaped recovery.
3. Second Bottom (The Confirmation)
Price returns to test the previous low. Crucially, it must not break below the first bottom. The second bottom can be slightly higher, at the same level, or slightly lower (a "Double Bottom with a higher low" is actually stronger).
4. The Neckline Break
The pattern is not confirmed until price breaks above the neckline—the horizontal resistance level connecting the peaks between the two bottoms. This is your entry signal.
How to Trade the Double Bottom
Entry: Wait for the Breakout
Many traders make the mistake of buying at the second bottom, hoping for the bounce. This is gambling, not trading.
The pattern is only confirmed when price closes above the neckline with conviction. This is where you enter.
Stop-Loss: Below the Second Bottom
If the pattern is valid, the price should never break below the second bottom. Place your stop-loss just below this level to limit your risk.
Profit Target: Measure the Move
Take the distance from the bottoms to the neckline, and project that same distance upward from the neckline. This is your minimum profit target.
Example: If the bottoms are at $100 and the neckline is at $110, the measured move target is $120.
Common Mistakes to Avoid
- Entering before the breakout. The pattern is not confirmed until the neckline breaks.
- Ignoring volume. A breakout on high volume is more reliable than one on low volume.
- Forcing the pattern. Not every "W" is a Double Bottom. Look for clear, distinct bottoms.
Published: February 3, 2026 | Category: Technical Analysis | Read time: 10 min
Pop Quiz
What must happen BEFORE a Double Bottom pattern can form?
💡 Hint: Think about what the pattern is reversing.
Practice: Trading the Double Bottom
Price breaks above the neckline at $110 with strong volume. You enter long.
The measured move target is equal to the pattern height. If bottoms were at $100 and neckline at $110, target is $120.
💡 Key Concept:
The Double Bottom shows sellers failed twice at the same level. Entry comes AFTER the neckline break, with stops below the second bottom.