The W pattern, also known as a double bottom, is a bullish reversal pattern in technical analysis. It indicates a potential shift from a downtrend to an uptrend. Here’s a breakdown of the W pattern:
Formation: The pattern resembles the letter “W” and consists of two consecutive lows (bottoms) separated by a peak (middle peak).
First Bottom: This forms after a prolonged price decline, marking the lowest point of the current downtrend.
Middle Peak: The price then rises, forming a peak before declining again.
Second Bottom: The price falls again to a level similar to the first bottom, indicating a support level.
Breakout: The pattern is confirmed when the price rises above the middle peak, signaling the start of a new uptrend12.
Trading the W pattern involves waiting for the breakout above the middle peak before entering a long position. This helps in minimizing risks and maximizing potential gains12.
Formation: The pattern resembles the letter “W” and consists of two consecutive lows (bottoms) separated by a peak (middle peak).
First Bottom: This forms after a prolonged price decline, marking the lowest point of the current downtrend.
Middle Peak: The price then rises, forming a peak before declining again.
Second Bottom: The price falls again to a level similar to the first bottom, indicating a support level.
Breakout: The pattern is confirmed when the price rises above the middle peak, signaling the start of a new uptrend12.
Trading the W pattern involves waiting for the breakout above the middle peak before entering a long position. This helps in minimizing risks and maximizing potential gains12.
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