Trading Double Bottoms

One trick to buying off correction-recovery patterns is spotting the point where new buyers have overcome the so-called weak holders. Long, flat bases wear out the weak holders. Cup-with-handle bases scare and wear them out. Double-bottom bases lull the weak holders into optimism, then take them out and shoot them.

Traders also call this formation the "W" pattern because the price traces something resembling the letter. This is a bullish pattern, although it's more failure prone and occurs less frequently than, say, the cup-with-handle, the best known of the correction-recovery patterns.