Double bottom chart is known world wide as a charting pattern used in technical analysis. This charting pattern describes the drop of a price, where first bottom should be 10%-20% and the second bottom will range within 3%-4 %percent of the previous pattern. In trade, double top and bottoms are one of the difficult price patterns to create. Few pointers that should be kept in mind while placing trade signals based on such formation. In such formations, precise borders are important as proper boarder formation will allow planning in advance and helps in decision making.
This chart provides clear picture when market gets set but it get really late to take advantage from it. As we all know and agree that markets are tending to move constantly so it is important to learn these pattern for better understanding of market changes. It has been seen that when a trend starts, market advances tend to rise with it and investors gets really interested in buying and selling as everyone wants to earn profit. Sometimes market reaches to such peak that not many buyers left in the market. After sometimes prices starts to drop again and at this point buying again starts in the market.
When such things start in market then a rally kind of thing starts where the second high is formed higher than the first high. Trend in business is all about knowing market and its position. Factually when the market reaches the top, it indicates that market is about to start falling and at this point uptrend start falling towards downtrend. When the market reaches its bottom then it indicates that market will start climbing again and the downtrend will convert into uptrend. Double bottom chart based on easy logic but analyzing this chart pattern is not simple as it sounds.