Double Bottom

A double bottom is a reversal pattern in which price makes two lows at roughly the same level, separated by a bounce, then breaks above the high between them: the W shape. The second low proves that the sellers who broke the first low could not find follow-through at the same price, and the break of the interim high confirms buyers have taken over.

The second low often undercuts the first slightly, running the stops resting below it before reversing; a shakeout low followed by a fast reclaim is a stronger structure than two lows that match to the penny. Volume ideally contracts into the second low and expands on the breakout through the neckline.

Target is the pattern's height projected up from the breakout. As with its mirror image, the pattern does not exist until the neckline breaks, and a W shape that keeps chopping below the interim high is still just a range.