Double Bottom
The Double Bottom is a chart patterns indicator used in Skyrexio Strategy Builder for pattern recognition and reversal/continuation signals.
Introduction
The Double Bottom is a bullish reversal chart pattern that signals potential LONG opportunities or SHORT position exits. This pattern occurs when price reaches a low, rallies, declines back to a similar low, then rallies again, creating a "W" shape that indicates potential trend reversal from bearish to bullish.
How Double Bottom Works
Double Bottom is a bullish reversal chart pattern with specific characteristics:
• Two troughs - Price reaches approximately equal lows separated by a peak • Neckline formation - The high point between troughs creates resistance (neckline) • Volume pattern - Typically increases on second low, expands on breakout • Confirmation requirement - Pattern confirmed when price breaks above neckline • Target calculation - Price target equals pattern height added to neckline
Key Characteristics
Category
Chart Patterns
Type
Bullish Reversal Signal
Primary Use
LONG entries, SHORT exits
Timeframe
All timeframes supported (1m to 1M)
Confirmation
Neckline break, volume, support levels
Strategy Applications
🟢 LONG STRATEGY (Primary Use)
Double Bottom is primarily a LONG signal - enter long positions when the pattern completes with neckline breakout.
Base Entry Order (LONG)
Base Order Condition: Double Bottom neckline breakout
First Condition: Double Bottom
Timeframe: 1H
Additional Confirmation:
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1HAdditional Entry Orders (LONG)
Additional Entry 1: Pattern confirmation with momentum
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 45
OR
Additional Entry 2: Breakout acceleration
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1HTake Profit Orders (LONG)
Rule 1: Exit condition - Pattern target reached
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H
OR
Rule 2: Exit condition - Overbought warning
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75
OR
Rule 3: Exit condition - Bearish reversal pattern
First Condition: Double Top
Timeframe: 1HStop Loss Orders (LONG)
Rule 1: Stop loss - Pattern invalidated (break below troughs)
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H
OR
Rule 2: Stop loss - Volume surge breaks bullish momentum
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
OR
Rule 3: Stop loss - Bearish momentum confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: MACD Signal Line
Timeframe: 1H🔴 SHORT STRATEGY (Secondary Use)
Double Bottom is used in SHORT strategies primarily as an exit signal for existing positions.
Counter-Trend Risk: Using Double Bottom for new SHORT entries is high-risk and should only be considered in extreme overbought conditions with very tight risk management.
Base Entry Order (SHORT) - Not recommended
New SHORT entries not recommended with Double Bottom pattern. Use bearish reversal patterns instead:
Take Profit Orders (SHORT) - Exit existing positions
Rule 1: Exit condition - Double Bottom signals trend reversal
First Condition: Double Bottom
Timeframe: 1H
OR
Rule 2: Exit condition - Support level reached
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H
OR
Rule 3: Exit condition - Momentum exhaustion
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25Stop Loss Orders (SHORT) - Protect existing positions
Rule 1: Stop loss - Double Bottom confirms uptrend
First Condition: Double Bottom
Timeframe: 1H
OR
Rule 2: Stop loss - Neckline breakout confirmed
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H
OR
Rule 3: Stop loss - Volume confirms breakout
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1HAdvanced Strategy Combinations
Multi-Timeframe Double Bottom Analysis (LONG)
Support Level Bounce (LONG)
Risk Management Guidelines
Position Sizing
LONG Strategy
Standard
Pattern at support with volume
SHORT Strategy
Avoid new entries
Exit existing positions only
High Volume
Increase confidence
Larger position acceptable
Low Volume
Reduce size
Wait for confirmation
Pattern Reliability Factors
✅ Forms at established support levels ✅ Volume increases on second trough ✅ High volume on neckline breakout ✅ Clear separation between troughs
Best Practices
For LONG Strategies
Wait for neckline break - Pattern isn't confirmed until breakout
Volume confirmation - Ensure high volume on neckline breakout
Support context - Best results at major support levels
Target management - Take profits at measured move targets
For SHORT Strategies
Exit signal only - Use primarily to exit existing SHORT positions
Quick recognition - Exit immediately upon pattern completion
No new entries - Avoid new SHORT positions with this pattern
Risk management - Protect capital from major reversals
Common Mistakes to Avoid
Early entry - Entering before neckline breakout confirmation
Wrong direction - Going SHORT on a bullish reversal pattern
Volume ignored - Trading without volume confirmation
Target greed - Holding beyond reasonable profit targets
Market Conditions Analysis
Uptrend
🟡 Medium (continuation)
🔴 Low (counter-trend)
Downtrend
🟢 High (major reversal)
🔴 Very Low (against trend)
Ranging
🟢 High (at support)
🟡 Medium (exit signal only)
High Volatility
🟢 High (clear patterns)
🔴 Low (whipsaws)
Low Volume
🔴 Low (wait for confirmation)
🔴 Very Low (avoid)
Related Patterns
Conclusion
Key Takeaways
PRIMARY USE: LONG entries after neckline breakout
SECONDARY USE: SHORT exits when holding positions
NEVER: New SHORT entries with this bullish pattern
ALWAYS: Confirm with Volume and wait for neckline break
Success with Double Bottom requires patience to wait for pattern completion and confirmation. The pattern's reliability increases significantly when it forms at major support levels with proper volume confirmation on the breakout.
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