Double Bottom

•This Chart Pattern is a bullish reversal  pattern that appears at the bottom of a downtrend and is characterized by a definitive bottom followed by a bounce and then a retracement to a second bottom that ceases its decent at or very close to the first bottom.

 • The stock’s volume should be diminishing as it makes the second bottom and then moves boldly up on increased volume ideally exceeding the peak of the bounce off the first bottom.

Double Bottom Psychology

•This pattern is the inverse of the Double Top and appears after a downtrend. 

 •Buying pressure enters the stock at the first bottom and begins to push the stock higher.

 •Shorts begin to cover on the bounce off the bottom as new buyers come into the stock.

 •As the bounce falters and begins to retrace back to the first bottom , buying once again enters the picture as the investment community determines the level to be a good buying opportunity.

 •As the stock comes off of the second bottom, it should do it with increased volume and surpass the middle peak.

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