Technical & Chart AnalysisW bottom
Double Bottom
A bullish reversal pattern of two troughs at roughly the same level, confirmed when price closes above the peak between them.
What Double Bottom means
A double bottom is the upside mirror of the double top. After a decline, price makes a low, bounces to an interim high, then falls back and holds at approximately the same low before turning up. The high between the two lows is the neckline, and confirmation requires a close above it rather than a brief intraday poke. The shape is often described as a W. A small undershoot on the second low is acceptable and can even strengthen the case if it triggers stops and then reverses sharply.
The measured objective projects the distance from the lows up to the neckline above the breakout point, and stops usually sit below the lower of the two troughs. Confirmation improves when an oscillator makes a higher low against the equal price lows, showing bullish divergence, and when the second low forms on reduced selling pressure. As with all classical patterns, identification is partly subjective, many candidates never confirm, and a neckline break can fail and return inside the range.
Worked example
Gold bottoms at 2,352, rallies to 2,412, then holds again at 2,356. A daily close above 2,412 confirms the double bottom with a measured objective near 2,472, that is the 60-dollar depth added to the neckline.
Related terms
- Double TopA bearish reversal pattern of two peaks at roughly the same level, confirmed when price closes below the trough between them.
- SupportA price area where buying interest has previously been strong enough to halt or reverse a decline.
- BreakoutA move of price decisively through an established support, resistance or consolidation boundary.
- DivergenceA disagreement between price and an indicator, where one makes a new extreme that the other fails to confirm.
Frequently asked questions
What does Double Bottom mean in forex trading?
A bullish reversal pattern of two troughs at roughly the same level, confirmed when price closes above the peak between them.
How does Double Bottom work in practice?
The measured objective projects the distance from the lows up to the neckline above the breakout point, and stops usually sit below the lower of the two troughs. Confirmation improves when an oscillator makes a higher low against the equal price lows, showing bullish divergence, and when the second low forms on reduced selling pressure. As with all classical patterns, identification is partly subjective, many candidates never confirm, and a neckline break can fail and return inside the range.
What is an example of Double Bottom?
Gold bottoms at 2,352, rallies to 2,412, then holds again at 2,356. A daily close above 2,412 confirms the double bottom with a measured objective near 2,472, that is the 60-dollar depth added to the neckline.
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