Bullish Reversal Chart Patterns
Here are some bullish reversal chart patterns. Reversal patterns are frequently seen before a new trend begins. Knowledgeable investors and traders are always on the lookout for these patterns.
This is because you will make the most money when you enter at the very beginning of a new trend. Spotting bullish reversal chart patterns will help you to do that.
A double bottom looks like a 'W'. The price declines to A, then it rises a little forming a middle peak before dropping again. The buyers cannot overcome the sellers and the sellers pushed the price down.
However, the stock finds support at the price level of A. Thus, the price rises again at B. The double bottom is completed when the price rises over the middle peak.
The entire pattern can be formed from days to weeks and sometimes months. The rule is, the longer it takes the double bottom to form, the more powerful the move to the upside will be.
The double bottom can be a very powerful reversal signal. New bull markets or uptrends can begin after a double bottom. Take a look at the chart above. A new uptrend developed after a double bottom. Therefore, always be on the look out for this pattern.
How to trade the double bottom
There are a few ways you can trade the double bottom. You can enter either at 1, 2 or 3. Entering at 1 is more agressive while entering at 2 or 3 is less agressive.
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