Groundstoneholdings
Education post 10/100 – How to trade double bottom pattern?Double Bottom
The double bottom is also a trend reversal formation, but this time we are looking to go long instead of short.
These formations occur after extended downtrends when two valleys or “bottoms” have been formed.
You can see from the chart above that after the previous downtrend, the price formed two valleys because it wasn’t able to go below a certain level.
Notice how the second bottom wasn’t able to significantly break the first bottom.
This is a sign that the selling pressure is about finished, and that a reversal is about to occur.
The price broke the neckline and made a nice move up.
See how the price jumped by almost the same height as that of the double bottom formation?
Remember, just like double tops, double bottoms are also trend reversal formations.
You’ll want to look for these after a strong downtrend.
Education post 9/100 – How to trade double top pattern?The double top pattern is one of the most common technical patterns used by Forex traders. It’s certainly one of my go-to methods of identifying a potential top.
Just as the name implies, this price action pattern involves the formation of two highs at a critical resistance level. The idea that the market was rejected from this level not once, but twice, is an indication that the level is likely to hold.
However, as simple as that may sound, there are a few critical things that must be present for this topping pattern to be useful (and profitable).
By the time you finish with this lesson, you will know exactly how to identify a double top as well as how to enter and exit the pattern to maximize profits.
