Technical Analysis: How to trade Double bottom pattern

Double bottom pattern is just opposite of double top pattern that we have discussed previously. This pattern is very easy to trade and learn how the market forces will be changing the direction of stock at some level. In technical analysis, this pattern offers higher chances of success if trader picks the trade with this pattern. A trader can freely apply and trade this pattern on any time frame chart as he comfortable with, even on intraday time frame chart. See how this pattern looks in below image:

Double bottom pattern

How to trade (steps):

When the price action come near the second bottom area, a trader can take long positions (buy entry) into the stock, this buying opportunity is valid only for the second bottom. So next time when same level is approached by the stock then, trader must watch price action very closely because it will be no trade zone. Double bottom pattern generally provides excellent trading opportunity with higher risk reward ratio, most of the time you may see 1:2 risk reward ratio. In many cases, it is also seen as high as 1:4, so 1 part is your risk and 4 parts are reward if trade goes in your favor.

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About Bhaveek Patel

Bhaveek Patel is a technical analyst and investor, his areas of interest includes stock market, forex, gold.

Comments

  1. Abrar says

    The article are very informative, will very useful and easy to understand if you have explain the same with practical example of any stock in bse

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