Double Bottom (W-Reversal)
The W pattern: two lows at similar prices, a bounce off the second, and a break of the neckline.
What is a Double Bottom?
A double bottom — sometimes called a W pattern — is a bullish reversal that forms after a downtrend. Price makes a low, bounces to a "neckline" level, drops back to a similar low, and then rallies past the neckline. The break above the neckline confirms the reversal.
Why It Works
The first low represents exhausted selling. The bounce tests whether new buyers can hold. When price returns to the same level but fails to break lower, it signals that supply is exhausted. The break above the neckline traps remaining shorts and fuels the reversal.
How to Trade Them
Watch for two lows at roughly the same price (the "W" shape). The high in the middle is the neckline. When price rallies back up and breaks decisively above the neckline, that's your entry. Hit BUY on the breakout candle.
Your Mission
Wait for the W shape to complete. Wait for the neckline break. Hit BUY close to the neckline for the best score. Measured-move target = neckline + distance from neckline to the lows.