DOUBLE BOTTOM :BANK NIFTYAdam and Adam Double Bottom Formation: This formation typically indicates a reversal pattern, characterized by two sharp V-shaped bottoms. It reflects a strong rejection of lower prices and often precedes a bullish trend reversal.
Breakout Confirmation: Yesterday's NSE:BANKNIFTY breakout above the neckline adds confirmation to the bullish bias. The candle closing above the neckline reinforces the validity of the pattern.
Target Projection: To estimate a target, measure the distance from the lowest low of the double bottom to the neckline. Then, add this distance to the breakout point. This projected distance can serve as a potential target level.
Stop-loss Placement: A stop-loss can be placed below the recent swing low or the lowest point of the double bottom formation. This level acts as a safety net in case the pattern fails to materialize, limiting potential losses.
Risk Management: Considering the possibility of a "huge downfall" in case of failure, it's crucial to implement proper risk management strategies. This includes setting a stop-loss at a level that aligns with your risk tolerance and position size.
