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Rick

Double Bottom

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Double Bottom

A reversal pattern whereby a bottom is formed on high volume, followed by a rally of at least fifteen percent, subsequently followed by a second bottom (within three percent of the first) on lower volume. Bottoms should be at least a month apart, and the reversal is confirmed when second rally crosses the peak of the first rally.

This double bottom occurred for MCI Worldcom, Inc. between August and October of 1998. This example meets all of the technical requirements for a double bottom, including a rally of at least fifteen percent between the two bottoms, high volume (including the three highest volume days in the duration of the chart), and a second bottom at least a month after the first within three percent in terms of price. After the price penetrated the first peak, the stock started a major uptrend, and is nearly $80 as of January, 1999.

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