I've noticed that many newcomers in crypto are unaware of the double bottom pattern, even though it is one of the most reliable trend reversal signals. I decided to look into it more closely because on current charts of BTC (79.38K, +1.87%) and BNB (621.50, +1.03%), this pattern appears quite often.

The double bottom pattern forms when the price drops, touches a certain level, bounces back up, then drops again roughly to the same level but does not break it. On the chart, it looks like the letter W, hence the name. The essence is that buyers (bulls) start to fend off sellers' (bears) attacks at the same support level.

How to recognize it? First, there must be a clear downtrend before formation. The two lows should be at the same level, with a difference of no more than 5-10%. Between them, there is always a small peak — this is called the neckline. Wait until the price breaks this neckline with increased volume. If this happens, the double bottom pattern is confirmed, and a reversal to the upside begins.

In practice, I look at three key points. First, I find two clear lows at the same level, then monitor the volume — it should increase with each touch of this level. And most importantly, I wait for a breakout of the neckline. If the price returns to this level after the breakout (retest) and bounces, it provides another confirmation.

To enter, I open a long position after the breakout, placing a stop-loss slightly below the resistance level. I determine the target price simply: I take the distance from the neckline to the lowest low and add it to the breakout point. The risk-reward ratio usually turns out to be 1 to 2 or better.

What do I like about this approach? Clear entry and exit points, it works on all timeframes from 5-minute to daily. TRB (20.15, -2.64%) on the daily chart currently looks interesting from this perspective. Indicators like RSI and MACD confirm the signal well — RSI shows weakening of the bears through divergence, and MACD crosses the zero line, signaling a change in momentum.

But there are pitfalls too. False breakouts happen — the price may break the neckline but then return back. On larger timeframes, the pattern forms slowly, sometimes over weeks. And most importantly, remember that no strategy guarantees profit, so always filter signals with indicators and manage risks.

This is one of my favorite patterns because the logic is simple and understandable even for beginners. If you see a similar structure on the chart, it’s worth paying closer attention. Maybe this will give you an entry point for a good trade.