Double bottoms are confirmations that an uptrend is imminent, however, extreme
patience is required and being able to control that trigger until the pattern
emerges will likely bring positive results.
A double bottom looks like the letter W when a line is used to smooth out prices.
This pattern is likely followed by a bullish trend. This pattern consists of
two bottom prices that are rounded close to each other and a middle whose top
has to be surpassed by a second wave for confirmation. A double bottom is always
followed by a short retracement right after it has passed the confirmation line.
Psycologically, it is hard to hang
on to this pattern right after you enter a trade when the price hits the confirmation
line. The reason is that almost all of double pattern formation is followed
by a retracement as much as 60%. Entering a trade right after a double bottom
would give you gains for a specified period of time and then completely reverse
against you until a loss is registered. However, having greater tolerance on
the the downside is required as the price will m ost likely deliver its action