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Double Bottom In Forex
The double bottom chart pattern is very bullish price structure. Though it is a simple pattern, traders often misuse it just because they do not fully grasp it. At the end of this article one will begin to use the double bottom pattern more efficiently.
First thing first, get the idea that a double bottom in Forex equals to a double support. The initial support is established at the first bottom or pivot but the second one is only validated after the price breaks above the neckline. The neckline is the high before the second bottom. Do not worry, I will be explaining everything.
Second Point About Double Bottom Chart Pattern
A double bottom in Forex is also a validation of a support level especially when the two bottoms are equal. Note that not all double bottom chart patterns have equal lows.
In the case of the equal lows, the second low is validating the first one. The Price can Validate a key level as a support by forming double, triple or even multiple bottoms at that same key level. One may also argue that there is often a high demand to buy the asset at that valid key level.
Third thing one should bear in mind is that the double bottom in Forex chart is fully ready when the price gets a support near the neckline or forms the first higher low above the neckline.
To trade a double bottom in Forex chart pattern more accurately, it is also recommendable that one uses the Andrews pitchfork tool. One will connect the 1st low, high before the second bottom and the second bottom itself. If the bullish momentum continues above the neckline the price often stays within the boundaries of the pitchfork tool.
Conclusion Anyone can quickly learn about the double bottom in Forex chart pattern in one day but the most important thing is not only the assimilation of that knowledge. A clear understanding of the message that the double is communicating to one will make one a better double bottom chart pattern trader.
This article is for those technical traders who want to dig a little bit more into the price structures of the double bottom in Forex chart pattern.
I hope this article will open your inner eyes of a chart pattern trader, and help you master the most reliable bullish chart pattern that is the double bottom chart pattern.
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