The Double Bottom is the bullish mirror of the Double Top — a high-reliability reversal chart pattern where price tests the same support level twice and holds on both occasions. Two troughs form at approximately equal lows, separated by a moderate bounce. The peak between the troughs defines a resistance line called the neckline. A confirmed close above the neckline triggers the bullish signal.

How to Identify

• Forms after a sustained downtrend — requires prior bearish momentum to reverse
• First trough: price finds support at a key level with elevated selling volume
• Bounce: price rallies 8–15% from the first trough to the neckline
• Second trough: price declines again to near the first trough on lower volume than the first decline
• Second bottom is often slightly higher than the first — a key sign of accumulation
• Neckline: horizontal resistance drawn at the peak between the two troughs
• Confirmed by a close above the neckline with rising volume; target equals the trough-to-neckline distance projected upward
• Time between troughs typically spans 3–8 weeks on daily charts

Market Psychology

At the first trough, sellers exhaust themselves and value buyers absorb the supply. Price rallies to the neckline. Sellers attempt a second push lower — but this time buyers defend the support level more aggressively. The second bottom's lower volume signals sellers are running out of fuel.

When the neckline resistance breaks, short sellers who entered near the tops face mounting losses and are forced to cover, which adds demand and amplifies the breakout move.