Technical analysis II

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13. Double bottom

A double bottom is the opposite of a double top and appears as a letter "W" on a chart.

The formation of a double bottom and the indicators of the reversal are much the same as for a double top, but the volume patterns are different. A true double bottom will show more volume on the second rally up than on the first rally.

If it's the other way round - low volume on the second rally - you may not be looking at a double top at all, but at a continuing downtrend.

A double bottom

1. Average share prices 2. Moving averages 3. Weighted moving averages 4. Where to plot moving averages 5. Interpreting moving averages - the basics 6. Classic interpretation of moving averages 7. Combining short and long term moving averages 8. Moving average convergence/divergence (MACD) 9. Reversal patterns 10. Head and shoulders top 11. Head and shoulders bottom 12. Double top 13. Double bottom 14. Rounding tops and bottoms 15. Broadening formations 16. Wedge formations 17. The momentum indicator 18. The momentum oscillator 19. Rate of change indicator 20. Price minus average 21. Relative strength indicator 22. Conclusion

• Martin Pring's Introduction to Technical Analysis
• Technical Analysis Plain and Simple
• Technical Analysis of the Financial Markets
• An Introduction to Technical Analysis - Reuters Financial Training Series