Bulkowski's Ugly Double Bottoms

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The figure to the right shows the preferred setup. The decline begins at point 1, usually several months before the ugly double bottom . As price nears the ugly double bottom , it declines at a faster rate, usually forming a straight-line run that approximates 45 to 60 degrees (points 2 to 3). This is the blow-off stage and it usually lasts at least a month, often 6 weeks or so. The panic selling ends at 3 and a bounce occurs which takes price back up to 4, forming the second bottom of an unconfirmed ugly double bottom .

After point 4, it should take just a few days (usually less than a week) for an upward breakout to occur in a strong push upward on high volume . Price usually continues in a strong advance upward. If you see price rounding over and closing below a trendline formed by joining points 3 and 4 and projected upward (the green sell line), then consider selling. Unless the trendline is unusually steep, a close below the trendline means the primary decline has work left to do and price is going lower. Save your bucks and sell immediately. Otherwise, watch the rise and monitor the 3-4 trendline . Many times, price will break this trendline several months later when the rise ends. That's the time to sell.
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