How Do I Trade a Double Bottoms Chart Pattern?

How to Trade the Double Bottoms Chart Pattern

To learn how to analyze the xauusd market using double bottoms chart patterns a trader should first of all learn the technical analysis of double bottoms chart pattern explained in this tutorial.

Double Bottoms Trading Pattern

Double bottom xauusd pattern is a reversal pattern that is formed after an extended downward xauusd trend.

Double bottoms xauusd pattern is made up of 2 consecutive troughs that are roughly equal, with a moderate peak between the 2 troughs.

Double bottoms xauusd chart patterns formation is considered complete once xauusd price makes the second low and then penetrates the highest point between the lows, called the neckline.

The buy signal from this double bottoms market bottoming out gold signal occurs when the xauusd market breaks-out the neckline to the upside.

In Gold, the double bottom pattern is an early warning gold signal that the bearish Gold trend is about to reverse.

Double Bottoms Chart Pattern is only considered complete/confirmed once the neckline is broken. In this double bottoms chart patterns formation the neckline is the resistance level for the xauusd price. Once this resistance is broken the xauusd market will move up.

Summary:

• Double bottoms xauusd chart pattern forms after an extended move downward - gold downwards trend
• This Double bottoms xauusd pattern formation indicates that there will be a reversal in the xauusd market
• We buy when price breaks-out above neck line: as described on the xauusd trading example illustrated and explained below.

Gold Trade a Double Bottoms Chart Pattern?

The double bottom chart pattern look like a W Shape xauusd chart pattern, the best reversal gold trading signal is where second bottom is higher than the first bottom as shown below.

This means that the reversal gold trading signal from the double bottom pattern can be confirmed by drawing an upwards gold trend line as shown below. If a trader opens a buy trading signal the stop loss will be placed just below this upwards trend line.

How to Trade the Double Bottoms Pattern - How to Analyze a Double Bottoms Chart Patterns