.jpg)
The double bottom trading method is a technical analysis strategy that is used to identify potential buying opportunities in a market. The method is based on the double bottom pattern, which is a reversal pattern that appears as a "W" shape on a chart.
​
​
Double Bottom
To use the double bottom trading method, follow these steps:
-
Identify the double bottom pattern on a chart: Look for two distinct lows that are roughly at the same price level, with a moderate peak in between them.
-
Confirm the pattern: Look for other indicators, such as high trading volume, to confirm that the double bottom pattern is valid.
-
Set a buy stop order: Above the resistance level which is the peak of the double bottom. This will ensure that you enter the trade as soon as the resistance level is broken.
-
Set a stop-loss order: Below the support level, which is the second low of the double bottom. This will limit your potential loss in case the trade does not go as planned.
​
After unsuccessfully breaking through the support twice, the market price shifts towards an uptrend.
Rounding top or bottom
The rounding top or bottom trading method is based on the rounding top or bottom pattern, which is a reversal pattern that appears as a gradual, rounded shape on a chart.
​
The rounding bottom or cup pattern usually suggests an upcoming bullish trend, whereas the rounding top pattern usually suggests an upcoming bearish trend. Traders can take advantage of these trends by buying at the bottom of the "U" shape, when the trend is expected to break through the resistance level.