Double Bottom Stock Chart Pattern Explained by David Moadel
welcome to looking at the markets with David Modell double bottom pattern this
is one of my favorite stock chart patterns it's not just for stocks it's
also for commodities Forex crypto currencies whatever it is that you're
trading it's powerful it really is and what it is is when you have a stock or
ETF or whatever it goes down to a certain level bounces right off of it
and then retests that level and you can call this a support level if you want to
okay it's a support level meaning that the market is demonstrating not just
once but twice that it doesn't want to bring the price below that level the
more times it bounces off of a certain level the stronger that support level is
and so when it bounces right off of it once and then bounces right off of it
again that's even stronger for the support level all right and a triple
bottom that could be even more powerful but we're just gonna stick to double
bottoms in this video and this is from s py also known as the spiders okay and
that is an ETF by State Street that tracks the S&P 500 and so this is a
pretty good proxy for the S&P 500 and we're in the middle of a double bottom
pattern as I'm making this video all right we're right in the middle of a
double bottom pattern here we are there's spy spwhy bounce right off of
this 260 let's say 264 level okay went down to around 264 bounced right
off of it so you can call that a support level but if you're not sure whether
it's a strong support level yet guess what it retested it went back down to
around the 264 level and then bounced right off of it again today balanced
right off of it I mean this is about as textbook as it gets
bounced almost exactly to the tick off of that same level all right and this
isn't the first time did it back here went down to let's call this the 257
level let's say bounced off of it and then came right back down to it almost
exactly the same level around around that same number round 257 or so and
then it was like a springboard for the next few months just up and up and up
that's powerful that's the market showing not once but twice that it
doesn't want to bring it below that level so these are two textbook examples
from the most popular ETF in the world SBY the spiders so we're in it right now
and that's why I'm bullish on this right now
not necessarily could it go down again it could it could form a triple bottom
or it could just go straight down there's no guarantee none of these work
a hundred percent of the time but it's a pattern that I've found to be pretty
powerful oftentimes let's take another look because those aren't the only two
times that s py or the S&P 500 ETF have formed double bottoms here's 2015 late
2015 bouncing twice off of approximately the
same level it's not an exact science okay you can't expect it to be
mathematically down to the penny or down to the tick to be exactly the same level
came right off of it went down again another double bottom here you could
even consider this whole thing a double bottom although it's not exact it's kind
of slanted all right but as we can see there's been a history of double bottom
patterns what's going on there that's the market going down shaking out all
the beginners okay because people who are beginners in the stock market when
they buy they usually buy high and then it goes down they sell low and they lose
the market will do that it will shake you out and it'll frustrate you if
you're a beginner because it'll go down and then head fake up and then go
down again and a lot of beginners will just give up
here they'll say you know what this whole stock trading thing is not for me
and they sell here when all they had to do was recognize the pattern and say oh
that's a double bottom right there good chance it's gonna come back up and if
you held on you would have gotten your money back
even if you bought at a high price you would have gotten your money back just
fine okay let's get another example this is e W Z the iShares Brazil ETF okay
textbook double bottom pattern came down to the same level around 31 and you can
see this is a long-term double bottom pattern alright yes I've seen them in
day trading that's fine they can work there as well I've seen them in swing
trading and I've seen them in long-term position trading this is a longer-term
one it took a took a long time to form this double bottom pattern this is for
patient long-term investors but it worked great textbook right here in the
Brazil ETF here during the summer and fall of 2018 I hope you're better able
to recognize the double bottom pattern perhaps I'll make a video on triple
bottom patterns maybe I'll do that I don't know let me know in the comments
what do you want to see is this helpful to you have you used this pattern on
your own with success tell me all about it give this video a thumbs up if you
liked it and subscribe to my youtube channel if you haven't done that already
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videos and I do coach people in trading and investing chart patterns things like
that so you can email me anytime my name is David Modell my email address is
David Modell at gmail.com thank you so much for watching and listening I'll
talk to you again soon
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