Double Bottom
Double bottom is a term used in financial analysis to describe a chart pattern in which a stock or other security’s price has two distinct lows in a short period of time. The double bottom pattern is considered to be a bullish reversal pattern, meaning that it signals that the security’s price is likely to rise in the near future. The double bottom pattern is often used by technical analysts to identify potential buying opportunities in a security.
History of the Term
The double bottom pattern was first identified by Charles Dow, the founder of Dow Theory, in the late 19th century. Dow Theory is a form of technical analysis that is based on the idea that the market discounts all available information and that price movements are the result of investor sentiment. The double bottom pattern is one of the most widely used technical analysis patterns and is used by investors to identify potential buying opportunities.
Comparison Table
| Pattern | Description |
|---|---|
| Double Bottom | Two distinct lows in a short period of time. |
| Head and Shoulders | A peak followed by a lower peak and then a higher peak. |
| Cup and Handle | A rounded bottom followed by a smaller rounded bottom. |
Summary
The double bottom pattern is a technical analysis pattern that is used to identify potential buying opportunities in a security. The pattern is characterized by two distinct lows in a short period of time and is considered to be a bullish reversal pattern. Investors can find more information about the double bottom pattern on websites such as Investopedia and StockCharts.com.
See Also
- Head and Shoulders
- Cup and Handle
- Bullish Reversal
- Bearish Reversal
- Support and Resistance
- Trend Line
- Moving Average
- Relative Strength Index (RSI)
- Bollinger Bands
- MACD
