Double bottom (W) reversal breakout of the center of the high

[Memorris]

Wondering if a study scan can be created that provides you with charts showing a double bottom or W reversal breakout?

 

[MerryDay]

Here are the Double Bottom Threads:
https://www.one-tab.com/page/-q6NmYHDRkyYh8bcbI9lhg

Keep in mind, that obviously, it is not possible to know for certain that price has hit "bottom" or "top". Therefore, all scripts, high, low, top, bottom, zigzag studies go back in time and repaint that perfect signal.

Read more about repainters:
https://usethinkscript.com/threads/answers-to-commonly-asked-questions.6006/


Here is how to do your own searches on the forum:
https://usethinkscript.com/threads/search-the-forum.12626/

 

[MerryDay]

A VIP Discord user asked about the characteristics of a double-bottom.
It should be noted that the Double-Bottom Strategy is a bullish continuation pattern.
As are most of the trend indicators on the forum.

Newer traders most common mistake when using trend indicators forget to first confirm that the instrument is actually in a BULLISH TREND on your higher timeframe!

With the double-bottom, the appearance of a "W" pattern is the LEAST important of the components of this strategy.

The double bottom pattern is a classic bullish signal in technical analysis that indicates a potential reversal. Here's how you can understand and apply the strategy:

1. Bullish Continuation Pattern: The double bottom typically occurs during an ongoing uptrend, suggesting that the bullish trend is likely to continue after the pattern completes.
2. Prior Uptrend: It's essential to identify a prior uptrend of at least 30% before the formation of the double bottom pattern. This confirms that the stock or asset has been in a strong upward trend before the pattern emerged.
3. Minimum Timeframe: The pattern usually takes a minimum of 7 weeks to form. This prolonged period indicates that there has been enough time for market sentiment to shift.
4. Base Depth: The depth of the base formed by the double bottom should be less than 40%. This indicates that the price decline during the formation of the pattern hasn't been too steep, suggesting a healthier correction.
5. Formation in Volatile Environments: Double bottoms often form in volatile market conditions, where prices swing widely, indicating indecision among traders. This volatility can contribute to the formation of the pattern.
6. Volume Confirmation: Volume plays a crucial role in confirming the validity of the pattern. Ideally, volume should be higher than average when the price breaks out above the pattern's neckline, typically by 30-40%. This surge in volume indicates strong buying interest.
7. Undercutting of Lows: The second low of the double bottom pattern should undercut the first low. This means that the second low should dip slightly below the previous low before reversing higher, so in reality not much of a real "W" shape of the pattern.
8. Optimal Buy Point: To enter a trade based on the double bottom pattern, traders often wait for confirmation of the breakout. The optimal buy point is typically set above the middle peak of the "W" formation. This ensures that the breakout is genuine and reduces the risk of false signals.

By understanding these characteristics and waiting for confirmation signals, The Double-Bottom can be an effective strategy. Obviously, no indicator can be used in isolation. Must be combined with a good basic strategy.