Double Bottom — Trading Wiki

What Double Bottom means

A bullish W-shaped reversal: price tests the same support twice, then rallies above the middle peak. Strongest with RSI divergence on the second low.

In depth

The double bottom is a bullish reversal pattern that forms after a sustained downtrend, characterized by two consecutive troughs at approximately the same price level separated by a moderate peak (the neckline). The pattern resembles the letter 'W' on a chart and signals that selling pressure has been exhausted and buyers are gaining control at a clearly defined support level. The formation process tells a clear narrative. The first bottom forms as the existing downtrend reaches a point where buyers emerge, creating a bounce. The subsequent rally creates the neckline — the intermediate peak between the two bottoms.

However, the rally loses momentum and price declines again to retest the support level established by the first bottom. The second bottom is the critical test: if support holds, it confirms that the level represents genuine demand. Pattern confirmation occurs when price breaks above the neckline (the peak between the two bottoms). The measured move target equals the depth of the pattern — the distance from the bottoms to the neckline — projected upward from the neckline breakout point. Volume characteristics enhance reliability. Ideally, volume is highest during the first decline, diminishes during the second decline (showing reduced selling conviction), and expands significantly on the neckline breakout.

A breakout on below-average volume is more likely to fail. RSI divergence between the two bottoms dramatically increases the pattern's reliability. If the RSI makes a higher low while price makes an equal or lower low at the second bottom, it confirms that selling momentum is genuinely weakening — providing a momentum-based confirmation of the structural pattern. The double bottom is one of the most common and reliable patterns in technical analysis, appearing across all markets and timeframes. Variations include the 'Adam and Eve' double bottom (first bottom is a sharp V, second is rounded) and the 'Eve and Eve' (both bottoms are rounded), each with slightly different probability profiles.

Key points

• W-shaped pattern with two tests of the same support level
• Confirmed when price breaks above the neckline (middle peak)
• Strongest with RSI divergence on the second bottom

Practical tip

Don't enter at the second bottom — you're guessing. Wait for the neckline break with volume, then buy the pullback to the neckline (which should now act as support). This strategy lets the pattern confirm itself before you risk capital.

Why it matters when you are learning

The double bottom is beginner-friendly and appears frequently. It's a great pattern to build your initial trading confidence around.

Practising Double Bottom on the simulator

Reading about Double Bottom and using it are different skills. Try it once in the simulator on an instrument you already follow, write down beforehand what you expect to happen, and check the journal a day later to see whether it played out that way. Educational simulation only — not financial advice.