double bottom

Double Bottom

A charting pattern used in technical analysis. It describes the drop of a stock (or index), a rebound, another drop to the same (or similar) level as the original drop, and finally another rebound.

Investopedia Commentary

The double bottom looks like the letter "W." The twice touched low is considered a support level.

Most technical analysts believe that the advance off of the first bottom should be 10-20%. The second bottom should form within 3-4% of the previous low, and volume on the ensuing advance should increase.

Related Links

An Option Strategy for Trading Market Bottoms
Price Patterns - Part 4
Market Reversals And How To Spot Them

See also: Bottom, Double Top, Jennifer Lopez

double bottom

In technical analysis, a chart formation indicating stock price recoverability over time. It is characterized by a drop in a stock's price to a low level, a recovery in price, and a second decline to the previous low price. If the stock price recovers a second time, the low price reached at the two bottoms becomes a level of support for the stock. It is a bearish sign if the stock subsequently falls through this level. Compare double top.