Double Bottom Pattern - How to Identify & Trade

Double Bottom Pattern

A powerful bullish reversal pattern shaped like a "W" that signals the end of a downtrend.

Bullish Reversal
1st Bottom 2nd Bottom Neckline Breakout Target

How to Identify a Double Bottom

• Two lows at approximately the same price: The pattern features two distinct troughs that touch or nearly touch the same support level. The lows should be within 1-3% of each other. This repeated support test is the defining feature of the pattern.

• Bounce between lows forms a neckline: After the first bottom, price rallies to create an intermediate peak. This peak becomes the neckline (resistance level) that must be broken to confirm the pattern. The neckline is the trigger line for the trade.

• Second low holds support: The second decline stops at or near the level of the first bottom. This shows that sellers could not push price to new lows and that demand is strong at this level. The second bottom often forms on lower volume than the first, indicating diminished selling pressure.

• Breakout above the neckline confirms: The pattern is only confirmed when price closes decisively above the neckline with increased volume. Until the breakout occurs, the pattern is not complete and could still fail. Many traders wait for a retest of the neckline as support before entering.

How to Trade the Double Bottom

Entry

Enter long when price breaks and closes above the neckline (the peak between the two bottoms) on above-average volume. Conservative traders may wait for a pullback retest of the neckline as new support before entering.

Stop-Loss

Place your stop-loss below the lowest point of the two bottoms. This is the invalidation level. If price breaks below both bottoms, the pattern has failed and a new leg down is likely.

Target

Measure the distance from the bottoms to the neckline (the pattern height). Add this distance to the neckline breakout point. This is the measured move target. For example, if bottoms are at $50 and the neckline is at $55, the target is $60.

Success Rate

78%
Historical success rate when confirmed with volume

The Double Bottom is one of the most reliable bullish reversal patterns in technical analysis. Studies by Thomas Bulkowski show that the pattern reaches its measured move target approximately 78% of the time when the breakout is accompanied by a significant volume increase. The pattern performs best on daily and weekly charts. Patterns that take 3-6 weeks to complete tend to be more reliable than those forming over just a few days. False breakouts are less common when the neckline breakout candle closes in its upper third with volume at least 50% above the 20-day average.

Frequently Asked Questions

A Double Bottom is a bullish reversal chart pattern that forms after a downtrend. It consists of two consecutive lows at approximately the same price level, separated by a peak known as the neckline. The pattern looks like the letter "W" on a chart. It signals that selling pressure is exhausted and buyers are stepping in to defend a key support level, often marking the beginning of a new uptrend.
A Double Bottom is a bullish reversal pattern that forms at the end of a downtrend. It is shaped like a "W" and signals a move higher. A Double Top is the bearish counterpart that forms at the end of an uptrend, shaped like an "M", and signals a move lower. Both patterns rely on the same principle of price testing a level twice and failing to break through, but they work in opposite directions.
The Double Bottom is called a "W" pattern because its shape on a price chart closely resembles the letter W. Price drops to a low (first leg of the W), bounces up to the neckline (the middle peak), drops back to a similar low (second leg), and then rallies above the neckline (completing the W shape). This visual shorthand makes it one of the easiest patterns to spot on a chart.
The two lows do not need to be perfectly equal. Most experienced traders allow a tolerance of 1-3% between the two bottom prices. The second low can be slightly higher or lower than the first. What is most important is that both lows clearly test and hold the same general support zone. A second low that is slightly higher than the first is often considered more bullish, as it shows buyers are becoming more aggressive.
Volume is a critical confirmation tool for the Double Bottom pattern. The ideal volume profile shows high volume on the first bottom, lower volume on the second bottom (indicating reduced selling pressure), and a significant volume surge on the breakout above the neckline. A breakout that occurs on weak volume is much more likely to be a false breakout and should be treated with caution. Volume confirmation can increase the pattern's reliability from roughly 65% to over 78%.

Related Patterns

Double Top

The bearish counterpart: an M-shaped reversal pattern forming at the end of an uptrend.

Cup & Handle

Bullish continuation with a rounded bottom (cup) followed by a small pullback (handle).

Morning Star

Three-candle bullish reversal pattern signaling the end of a downtrend.

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Part of our Technical Analysis Guide