The “W” pattern is a common reversal pattern in technical analysis that appears at the end of downtrends and indicates a possible price reversal towards the upside. It consists of two consecutive bottoms (Double Bottom) that resemble the letter “W”, making it an effective tool for predicting future price movements.
#_Pattern_Components:
1. First bottom: represents the first price decline.
2. Second bottom: It occurs after a slight correction, and is often close to the level of the first bottom.
3. Resistance line: extends between the two highest points between the two lowest points.
4. Resistance breakout: A signal that the pattern is complete and the uptrend has begun.
#_How_to_trade_using_pattern:
1. Entry: It is made after breaking the resistance line upwards.
2. Stop Loss area: It is determined below the second bottom to reduce risks.
3. Target area: The target is determined based on the length of the pattern (the distance between the first bottom and the resistance line), and added above the breakout point.
#_Important_signals_in_the_picture:
- Support hammer: indicates the presence of strong reversal candles at the bottoms, which enhances the possibility of an uptrend.
- Resistance Breakout: Strong green candles that break through the resistance line represent a clear entry signal.
- Targets: Shown at a specific higher level, representing the take profit point.
- Stop Loss: Shows the security level set below the second bottom.
#_Pattern_Advantages:
- Provides clear entry and exit points.
- Can be used to set long term targets when the breakout is complete.
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