Hope you’ve been having a great trading week. Last week, we talked about the Double Top Reversal Pattern. Today, I wanted to share another reversal pattern which is the opposite of the Double Top, called Double Bottom. A Double Bottom is formed once the price comes into a strong support area as it’s moving down. The price bounces of this level once and then comes back to test the level again. The price gets rejected once again, leading to a reversal in the market.
Here is a trade setup based on the Double Bottom Reversal Pattern.
Trade 1: This Double Bottom trade setup occurred in GBPUSD. Here, we look at the GBPUSD 15 min chart. The price came down and tests the 1.5680 level. This level has proven to be a strong support and resistance level based on the previous price action at this level. The price bounces off of this level on the first try but then comes back and tests it again. The level holds once again and price is rejected again. We see multiple attempts by price to push through but fail every time. We can see how price just stops at this level and none of the candles close below. We enter the trade on the pullback around 1.5690. The overall move was 90 pips allowing us to bank around 60 or 70 pips in this trade. Exit the trade on the pullback after the big doji rejection at the top.
I see this patterns setup on multiple time frames and have found it to be very profitable to trade. Look for the Double Bottom pattern to setup at key support and resistance levels for the best trades.