Double or Triple Bottoms are reversal patterns that typically occur at the end of a downtrend.
Identifying these patterns is usually easy, as they resemble a 'W' shape at the bottom.
After a significant move down, the price consolidates, and at the second or third attempt to break through support, the level is rejected.
Aggressive traders can enter at the low of the second or third attempt to break through the support (bottom). This allows the trader to potentially realise profit before the neckline of the structure as this pattern can fail at this point.
Conservative traders can wait for the price to break out of the structure and retest the neckline before entering.
Here are some key points to keep in mind:
- The price movement cannot break past the prior low, creating the Double or Triple Bottom
- The measured move of these patterns is the Double or Triple Bottom to the neckline, which can be used to project targets
- Look for engulfing candles or Hammers at the second peak to assist with an aggressive entry if this fits within your Trading Plan
- Entry triggers usually centre around the candles and can be traded as an SFP if a Hammer presents itself