The double bottom is the opposite of the double top and is considered to be a major reversal chart pattern after a strong down trending market.
The trading pattern is formed by two bottoms that are almost similar in height with a neckline (temporary high) in between. The pattern is confirmed on a sustained break of the neckline.
Forex Double Bottom Chart Pattern Example (NZD/USD 4 Hour Chart)
Forex Double Bottom Trading Ideas
Conservative forex traders: wait for a sustained break of the neckline (breaking temporary resistance).
Aggressive forex traders: buy in the vicinity of the second bottom. Look for bullish reversal candlestick patterns to enter a low risk – high reward trade.
Tip: In case you have missed the double bottom price breakout – After the sustained break, a small retracement back to the neckline is very common.