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Bottoming Price Formation - Double Bottom

A double bottom is a frequently observed bottoming formation that occurs when a bottom is followed by a short-term upside and then a short-term downside that culminates with a second bottom. The second bottom reaches approximately the same price value as the first bottom and is followed by a significant upside.

Below is a double bottom chart of daily closes from Yahoo!Finance for Colgate-Palmolive (CL). The red horizontal line is the support level for the two bottoms.

 

See Double Bottom is a Bullish Pattern for another example of a double bottom.

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