Also known as: W bottom · W pattern · Double bottom reversal
A double bottom is a bullish reversal pattern that forms when price drops to roughly the same low twice, with a rally in between, creating a “W” shape. It is confirmed when price closes above the high between the two lows, the neckline, which signals that sellers have failed to break support and the downtrend may be ending.
It is the mirror image of the double top and one of the most frequently traded bottoming patterns.
What the pattern looks like
After a decline, price finds a low and bounces. The bounce fades and price falls back to roughly the same level, where buyers defend it a second time. A rally that then breaks above the bounce high completes the W. The two lows form support; the peak between them is the neckline.
The second low is often where you see reversal candles such as a hammer or a bullish engulfing pattern, which hint that buyers are stepping in.
How to identify it
- Prior downtrend. The pattern reverses a decline.
- First low. A swing low followed by a meaningful rally.
- Neckline. The rally high between the two lows.
- Second low. Price returns to roughly the first low and holds.
- Breakout. A candle closes above the neckline.
- Optional retest. Price pulls back to the neckline, now support, and holds.
Context helps here too. A double bottom that forms at a well-known support zone, such as a prior breakout level or a round number, tends to attract more attention than one in the middle of nowhere. Checking the higher timeframe before you commit takes a minute and often explains why a breakout runs or stalls.
How to trade it
Entry. The standard trigger is a close above the neckline. A pullback entry on the retest of the neckline offers a tighter stop but may not come.
Stop. A common invalidation sits just below the lower of the two lows. After a retest, some traders use the retest low instead.
Target (measured move). Measure from the lows to the neckline and add that distance to the neckline.
Worked example: a stock bottoms twice near $40 and the rally between the lows peaks at $46. The height is $46 − $40 = $6. After a close above $46, the measured-move target is $46 + $6 = $52. With a stop at $39.50, the risk on a $46 entry is $6.50 for a potential $6, slightly under 1:1. Buying a retest at $46.50 with a stop at $44.50 changes the picture: $2 of risk for $5.50 of potential, about 2.75:1. The risk/reward calculator and position size calculator make these comparisons quick.
For a first partial target, many traders look at prior resistance or a Fibonacci retracement of the preceding decline.
Confirmation: volume, RSI, sentiment
- Volume. Lighter selling volume on the second low and stronger volume on the neckline breakout are classic signs of a genuine bottom.
- RSI. A higher RSI low on the second bottom (bullish divergence) suggests downside momentum is fading.
- Sentiment. Double bottoms often form when pessimism peaks. A bearish crowd against a chart that refuses to make new lows is a notable contrast, but it is context, not a trigger.
Common mistakes
- Buying the second low blindly. Until the neckline breaks, support can still fail and the downtrend can resume.
- Lows too close together. Two lows a few candles apart are usually just a pause.
- Ignoring the trend on a higher timeframe. A daily W inside a weekly downtrend may only produce a bounce.
- Stop too tight under the neckline. Normal retests often dip slightly below it.
- Expecting the full target. Price frequently stalls at earlier resistance.
Pattern statistics caveat
The double bottom is popular and widely watched, so it often works as a self-reinforcing level, but breakouts can fail, especially in strong downtrends or low-volume markets. Treat any precise success rate with scepticism and focus on defining your risk. Related patterns include the inverse head and shoulders, which adds a deeper middle low.
Spot it automatically with SnapPulse
Point your camera at a chart or upload a screenshot and SnapPulse returns, in about five seconds, the detected pattern with its bias and confidence percentage, support and resistance plotted on the candles, RSI, MACD, ATR and EMA explained in plain language, and an entry zone, stop, target and reward-to-risk ratio. Download SnapPulse to try it.
Educational content — not financial advice.
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