These are two ways for smart professional traders to discover cryptocurrencies and share price reversals

Homeopathic trading is one of the best ways to make a profit. If traders learn to spot new trends early, it provides an opportunity to buy with a good risk-reward ratio. In addition to identifying trends, traders should also be able to identify when the trend reverses.

Although there are several patterns that indicate possible trend changes, the one that is easiest to find is the double bottom pattern. This can help traders change their strategy when the trend changes from bearish to bullish.

Let’s take a look at the double bottom pattern and find some of the best ways to trade.

What is a double bottom?

The double bottom pattern is formed after a downtrend and is composed of two lows. These lows are roughly formed near similar levels, with a small peak between the troughs. When the price breaks through and closes above the small peak after the second trough is formed, the setting is complete. This is a reversal pattern that will lead to mid- to long-term trend changes. Since the pattern is similar to the shape of “W”​​, some people also call it a W-shaped bottom.

W bottom pattern. source: Transaction view

The image above shows the structure of the double bottom pattern. The asset has been in a downward trend, but at a certain price level, the bulls believe that the asset is undervalued and start buying. This helps to form the first bottom where demand exceeds supply and begins to ease the rebound.

However, most shorts still don’t believe that the bottom has been formed, and they open short positions again after the pullback. The price fell, but when it approached the level of the first bottom, the bulls began to accumulate again, which prevented the decline and started another relief rally. A second bottom within 3% of the level of the first bottom is generally considered valid. This is not a fixed number, and traders should exercise caution in real trading.

When the price rises above the resistance line, it indicates that the trend has gone from falling to rising. By calculating the distance from the resistance line to the bottom, and then adding a number to the top of the resistance line, the minimum target goal of the pattern can be reached.

Let’s look at some examples to better understand the concept.

XTZ/USDT daily chart. source: Transaction view

Tezos (XTZ) The price is in a downtrend and then hit the first bottom at $1.78 on November 4, 2020. Since then, the XTZ/USDT currency pair has started a relief rebound and stalled at $2.96 on November 25, 2020. At this level, the bears once again have an opportunity to be optimistic about them and sell aggressively.

Although the currency pair fell below the $1.78 support level and fell to $1.57 on December 23, 2020, the short positions were unable to maintain a low level. The exchange rate rebounded quickly the next day and began to rebound, forming a second bottom.

The bears actively defend the resistance line and try to trap the eager bulls after the break. The bulls bought on dips, and the currency pair broke through strongly on February 5th, starting a new uptrend.

The depth from the resistance line to the bottom is $1.18. Adding this value to the resistance level of $2.96 gives a minimum pattern target of $4.14. However, in this case, the currency pair exceeded the target and rose to $5.64 on February 14.