Dictionary

Double bottom

Two troughs at roughly the same price separated by a peak, completed only when price closes above that peak.

Double top and double bottom. Two peaks at roughly the same height with a dip between them make an M; two lows at roughly the same level make a W. The dashed line drawn through the middle is the neckline, and traders watch for price to close through it.

The mirror of double-top. Sellers pushed to the same low twice and could not extend, and the pattern completes on a close above the intervening peak, the neckline.

The stronger variation is when the second low pokes slightly beneath the first, sweeping stops below equal-lows, and then reclaims. That version is often called a failed-breakdown and gives a tighter invalidation-level than a textbook flat double bottom.

Bottoms typically take longer to form than tops, because panic is fast and confidence is slow. Expect more retests and more time in a base than in a top, and be suspicious of a double bottom that completes in a handful of bars after a steep decline.

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