Recently, I noticed that many traders get confused about one of the most reliable technical analysis patterns. We're talking about the W pattern, or as professionals call it, the double bottom. It’s truly a powerful tool if you know how to read it correctly.

The W pattern is a chart pattern that forms when the price reaches a bottom. It signals a trend reversal from bearish to bullish. Essentially, this means that sellers are losing strength, and buyers are starting to take control. When I see such a structure on a chart, it looks like two dips at roughly the same level with a small peak between them. Hence the name—the W pattern.

How to recognize it? First, I look for a downtrend. Then, I watch for the price to touch the same support level twice without breaking below it. Between these two lows, there should be a bounce upward—that’s the neckline that separates the two dips. When the price breaks above this neckline with increased volume, that’s the signal. Often, after the breakout, the price returns to this level for a retest, and if it holds as support, the W pattern is fully formed.

In trading, I apply the W pattern as follows. First, I wait for the price to clearly form two lows at the same level— the difference between them should be no more than 5-10%. Then, I monitor the volume. If the volume on the second touch is higher than on the first, that’s a good sign. When the price breaks the neckline, I open a long position. I place the stop-loss slightly below the support level, and I set the target price by adding the pattern’s height to the breakout point.

What are the advantages of this approach? Entry and exit points are very clear. The W pattern works on any timeframe—from 5-minute charts to daily charts. I often confirm signals with indicators like RSI and MACD, which significantly increases accuracy. The risk-reward ratio is usually favorable—you can earn twice as much as your risk.

But there are also downsides to keep in mind. False breakouts happen when the price seems to break the neckline but then falls back down. Also, on higher timeframes, the pattern can take weeks to form, requiring patience.

An important point: the larger the timeframe, the higher the potential profit from the W pattern. On 5-minute charts, movements are quick; on daily charts, they are more substantial. But remember, no strategy is 100% protected from losses. That’s why I always use additional confirmations through RSI and MACD. RSI helps identify weakening of the downtrend via divergence, and MACD shows momentum changes when its lines cross the zero level.

Currently, BTC is trading at 68.54K with a gain of +1.30%, and BNB is at 617.50 with a gain of +0.89%. If you see a W pattern on these assets’ charts, it could be a good entry point for analysis.

I hope this information helps you better understand the W pattern. Share your observations in the comments, like, and subscribe for updates. Thanks for your attention!