Technical Glossary / Chart Patterns
Double Bottom
Two lows at a similar price, with a peak between them, completed by a break of that peak.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A double bottom is a bullish reversal. Price falls to a low, bounces, falls again to roughly the same low, and holds. It completes on a close above the interim high.
How to identify it
Two troughs in the same area, with a rally between them that creates a clear neckline. The second low can undercut the first by a small amount and still be the pattern if it reverses back up. A deep undercut that does not reclaim is just a lower low.
Bullish reading
The close above the midpoint high is the long trigger. Risk goes under the second low. The pattern height added to the break is the common planning distance.
Bearish reading
A close under the second low fails the pattern and resumes the decline.
Common mistakes
Buying the second touch before the bounce high breaks. You are early, and the low is not yet confirmed as a floor the market will leave.
Limitations
Double bottoms in a persistent downtrend are often just pauses. Look for the break, not the shape alone.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.