Identification: A double bottom pattern is a classic technical analysis chart formation representing a major change in trend and a momentum reversal from a prior down move in market trading. The double bottom looks like the letter “W.” The twice-touched low is now considered a significant support level. While those two lows hold, the upside has new potential for a breakthrough.
Occurrence: It describes the drop of a security or index, a rebound, another drop to the same or similar level as the original drop, and finally another rebound (that may become a new uptrend).
Study: In terms of profit targets, a conservative reading of the pattern suggests the minimum-move price target is equal to the distance of the two lows and the intermediate high. More aggressive targets are double the distance between the two lows and the intermediate high.