Double bottom BULLISH

What a double bottom is

A double bottom is a reversal pattern shaped like a W: price falls to a low, bounces, returns to test the same area, holds, and then rallies through the peak between the two lows (the neckline). The pattern confirms on the neckline break — two lows alone are just a range.

The psychology behind it

The first low is fear. The bounce is relief. The second decline is the crucial test: sellers get a full opportunity to push price to new lows and fail. Often the second low prints on visibly lighter volume — the sellers who wanted out already got out. That failure emboldens buyers who missed the first low, and the neckline break forces shorts who sold the retest to cover. The pattern is, at heart, a measured demonstration that supply is exhausted at a price.

How MKTDATA detects it

The template encodes the W with the trigger zone at the neckline. Shape variance tolerates the second low sitting slightly above or below the first (real doubles are rarely exact), trend correlation rewards the overall arc, and momentum checks favour the classic divergence signature — price matching its low while RSI holds higher. Partial matching surfaces stocks still carving the second low as Forming.

Trading notes

The textbook entry is the neckline break, with invalidation below the second low, and the measured move projects the pattern's depth above the neckline. The recurring failure mode is the triple test: a "double" bottom that gets tested a third time frequently breaks — each test consumes buyers. Intraday doubles form and resolve within hours, so the 5-minute version is a compressed, faster-twitch relative of the daily-chart classic.