Bottom-picking pattern-W bottom

W bottom, also known as "double bottom", is a common bottom pattern in technical patterns. W bottom refers to the market trend chart formed when the low points of the currency price are roughly the same for two consecutive declines. Its neckline position is a horizontal straight line drawn by the convex point formed by the first pullback, and the line connecting the two lowest points is called the low line/support line.

The characteristics of W bottom are as follows:

There should be a certain time interval between the first low point and the second low point of the W bottom. The time is too short and the reliability is not strong. In theory, it should not be less than one month.

The trading volume of the first low point is greater than the trading volume of the second low point.

When breaking through the neckline, a large trading volume is required, and the trading volume is small during the pullback.

Once the double bottom pattern is formed, its accuracy is very high and the upward breakthrough is very strong.

When investors encounter the W bottom pattern, how to find the best buying point?

When the W bottom pattern is about to form, the K line when breaking through the neckline is as shown in the figure, and the K line entity passes through the neckline, it is a clear bullish signal, and the market is likely to rise in the future. Usually this position is called an aggressive buying point.

When the price breaks through the neckline, it falls slightly, retreats to the neckline price, and then rises again. We call such price changes as retracement to confirm support. After the price retracements to the neckline, when it rises again and breaks through the previous price high, the method to confirm the breakthrough is still to look at the closing result of the K-line, whether the rising K-line entity crosses the resistance line, as shown in the figure. Usually this position is called a stable buying point.