A downward price trend bottoms out, rises, and then bottoms again before climbing.
Prices trend down and should not drift below the left bottom. There should be a 1% -2% rise or more between the two bottoms, measured from low to high. Bottom to bottom price variation is .5% or less. Bottoms should be at least a few intervals apart. After the second bottom, price must rise above the confirmation point without falling below the right bottom. The confirmation point is the highest high between two bottoms.
Here you can see how Double Bottoms appear on the chart. Note that all Double Bottoms are confirmed with the right point of the pattern exceeding the confirmation point as shown below.
Percent of successful formations – 68%
Failure rate – 17%
Average time to throwback completion – 2 hours
Compute the formation height by subtracting the lowest low from the confirmation point. Add the difference between the two bottoms. The result is the expected price move.