What is a Double Bottom Pattern?
A double bottom is a bullish reversal pattern where price puts in two swing lows at roughly the same support level, then confirms the reversal by breaking above the swing high between them. That swing high is called the **neckline**. Once price closes above it, the pattern's complete.
What Does a Double Bottom Pattern Indicate?
Seller exhaustion.
The first low pulls in fresh demand. The retest proves sellers can't drive price to a new low. When buyers finally lift price through the neckline, you've got a confirmed transfer of control from sellers to buyers.
Is the Double Bottom Pattern Bullish or Bearish?
**Bullish.** The pattern only forms after a downtrend, and the breakout above the neckline signals a trend shift from down to up. A close above the neckline is required to confirm the pattern; without that close, the move is just a failed bounce.
How to Identify a Double Bottom Pattern?
Two swing lows at roughly the same price, with a clear swing high between them. Look for:
Prior downtrend leading into a visible support zone
First swing low, then a bounce up to a swing high (your neckline)
Second swing low at or near the first one — a retest, not a new leg down
Breakout: a clean candle close above the neckline
⚠️ **Warning:** If the second low breaks meaningfully below the first, the move is a continuation of the downtrend. Don't force the pattern to fit your bias.
How to Draw a Double Bottom Pattern?
Anchor both lines to obvious swing points — not intrabar wicks or noise. Two steps:
Draw a horizontal support line (or zone) across the two lows
Draw a horizontal neckline at the swing high between the two troughs
🔥 **Pro Tip:** Treat support and the neckline as **zones**, not exact prices. Markets respect areas of supply and demand. A line drawn too tight will fake you out on every wick.
How to Trade a Double Bottom Pattern?
Long entry on a close above the neckline — or wait for the retest. Both work.
Breakout entry: Buy the close above the neckline. Aggressive traders buy the first pullback after the break.
Retest entry: Buy when price comes back to the neckline and holds it as support — ideally with a rejection candle (long lower wick, strong close).
Confirmation: Look for volume expansion versus the recent average. Clean acceptance above the neckline beats a single wick-through every time.
What is the Profit Target for a Double Bottom Pattern?
The target is a measured move equal to the pattern height, projected up from the breakout point.
Formula: Target = Neckline + (Neckline − Bottom)
Example: Bottom at $90, neckline at $100. Height = $10. Target = $110 after the breakout above $100.
📌 **Key Takeaway:** The measured move is a **starting target**. If the broader trend supports continuation, scale out partials at the measured move and trail the rest. Don't leave runners on the table just because price hit your minimum.
Where to Put a Stop Loss on a Double Bottom Pattern?
Below the second low — or below the shared support zone. If price breaks back through the lows, the pattern's invalidated and you're out.
Standard placement: A few ticks (or cents) below the second swing low
Volatility-based placement: Below support by a fraction of ATR — then size down to keep your dollar risk constant
⚠️ **Warning:** Don't move your stop "just this once" because price tagged it intraday. That's how a -1R good wrong turns into a -3R bad wrong. Follow the stop.
What Happens After a Double Bottom Pattern?
Three scenarios, in rough order of frequency:
Common continuation: Neckline flips from resistance to support, then price trends higher on follow-through buying.
Throwback / failed breakout: A fast drop back below the neckline signals the breakout failed — and usually traps late buyers chasing the move.
Range behavior: If price chops around the neckline, the market's still negotiating value. Follow-through slows, and the edge on the pattern fades.
💡 **Trader Truth:** A clean-looking pattern doesn't guarantee follow-through. Size every breakout for the outcome where it fails — because eventually, one will. Survival depends on managing imperfect patterns without blowing up.