The Double Bottom is the bullish mirror image of the Double Top. Price falls to a support level, bounces, falls again to the same support, and holds โ confirming that buyers are strongly defending that price. The pattern completes when price breaks above the peak between the two bottoms.
Pattern Diagram
Two equal lows at support โ Break above neckline = target equal to pattern height
Key Characteristics
- Both bottoms should touch approximately the same price level (within 1โ3%)
- The rally between bottoms should be meaningful (at least 5โ10%)
- Second bottom often forms on lower volume (selling exhaustion)
- Neckline breakout must be on high volume to confirm
Price Target
Double Bottom Target
Target = Neckline + (Neckline โ Support Level)
Example: Support โน400, Neckline โน450
Target = 450 + (450 โ 400) = โน500
Trading the Double Bottom
Entry: Buy on neckline breakout (close above neckline on high volume)
Stop Loss: Below the second bottom
Target: Neckline plus pattern height
Highest conviction signal: Second bottom forms with bullish RSI divergence (RSI makes higher low while price makes same low) + above-average volume on neckline break
Stop Loss: Below the second bottom
Target: Neckline plus pattern height
Highest conviction signal: Second bottom forms with bullish RSI divergence (RSI makes higher low while price makes same low) + above-average volume on neckline break
The Double Bottom is extremely common on NSE stocks after sharp corrections. Watch for it on large-cap stocks after a 20โ30% correction from highs. The second bottom testing the same level as the first, holding, and then breaking the neckline on volume has historically provided excellent risk-reward entries.
