A double bottom is a bullish reversal pattern in technical analysis, often seen in financial markets. It resembles the letter “W” and indicates that the price of an asset has hit a significant support level twice and bounced back each time, suggesting a potential reversal from a downtrend to an uptrend12.
Here’s a quick breakdown:
Formation: The pattern forms after a prolonged downtrend, with two distinct lows at roughly the same price level. Significance: It signals that the selling pressure is weakening and buyers are stepping in, potentially leading to a price increase. Confirmation: The pattern is confirmed when the price breaks above the resistance level formed by the peak between the two lows3.
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