How to Trade a Double Bottoms Chart Pattern in XAUUSD

How to Trade the Double Bottoms Chart Pattern

To learn how to analyze the xauusd market using double bottoms chart patterns a trader should first of all learn the technical analysis of double bottoms chart pattern explained in this tutorial.

Double Bottom Trading Pattern

Double bottom xauusd chart pattern is a reversal pattern that is formed after an extended downwards gold trend.

Double bottom gold trading chart pattern is made up of 2 consecutive troughs which are roughly equal, with a moderate peak between the 2 troughs.

Double bottom xauusd chart patterns formation is considered complete once gold price makes the second low and then penetrates the highest point between the lows, called the neckline.

The buy signal from this double bottoms market bottoming out xauusd signal occurs when the xauusd market breaks-out the neck line to the upside.

In XAUUSD, the double bottom pattern is an early warning xauusd signal that the bearish xauusd trend is about to reverse.

Double Bottoms Chart Pattern is only considered complete/confirmed once the neckline is broken. In this double bottoms chart patterns formation the neckline is the resistance level for the gold price. Once this resistance is broken the xauusd market will move up.

Summary:

• Double bottoms xauusd chart pattern forms after an extended move downwards - gold trading downwards trend
• This Double bottom xauusd chart pattern formation indicates that there will be a reversal in gold trading market
• We buy when price breaks-out above the neck line: as explained on the gold trading example shown below.

XAUUSD Trade a Double Bottoms Chart Pattern in XAUUSD?

The double bottom chart pattern look like a W Shape xauusd chart pattern, the best reversal xauusd signal is where second bottom is higher than the first bottom as illustrated and shown below.

This means that the reversal xauusd trading signal from the double bottom chart pattern can be confirmed by drawing an upwards xauusd trend line as shown below. If a trader opens a buy signal the stop loss will be placed just below this upwards trend line.

How to Trade the Double Bottoms Chart Pattern - How to Analyze a Double Bottoms Chart Patterns