DOUBLE BOTTOM PRICE ACTION
This chart pattern starts forming with bears already in control of the exchange rate's downtrend. Bulls make a stand at a certain rate that will be tested exactly twice before they are finally able to reverse direction, and the exchange rate starts an uptrend.
Let's break down the pattern formation!
In a downtrend, price action finds the first resistance (1), which will be the horizontal resistance for the rest of the pattern formation.
Price action reverses direction from the first resistance (1) and goes upwards till it finds support (2), which will be the only high in the pattern.
Price action reverses direction from support (2) and goes downwards, till it finds the second resistance (3), which will be around the same rate of the first resistance (1)
The pattern is completed when price action reverses direction from the second resistance (3) and goes upwards till it breaks the pattern's upper border at point (4)
Entry: after breaking the pattern's upper border at point (4), either with an entry after the breakout, or after a possible retest of the upper border.
Take profit: identified by measuring the vertical distance between the pattern's upper and lower borders, that measurement is then applied from the breakout rate (4)
Stop loss: the pattern's upper border, which is identified by point (2)
This chart pattern starts forming with bears already in control of the exchange rate's downtrend. Bulls make a stand at a certain rate that will be tested exactly twice before they are finally able to reverse direction, and the exchange rate starts an uptrend.
Let's break down the pattern formation!
In a downtrend, price action finds the first resistance (1), which will be the horizontal resistance for the rest of the pattern formation.
Price action reverses direction from the first resistance (1) and goes upwards till it finds support (2), which will be the only high in the pattern.
Price action reverses direction from support (2) and goes downwards, till it finds the second resistance (3), which will be around the same rate of the first resistance (1)
The pattern is completed when price action reverses direction from the second resistance (3) and goes upwards till it breaks the pattern's upper border at point (4)
Entry: after breaking the pattern's upper border at point (4), either with an entry after the breakout, or after a possible retest of the upper border.
Take profit: identified by measuring the vertical distance between the pattern's upper and lower borders, that measurement is then applied from the breakout rate (4)
Stop loss: the pattern's upper border, which is identified by point (2)