[B]Student’s Question:[/B]
The distance between low point #1 & #2 is about 3 weeks and between #1 & #3 is about 4 months. I’m not sure when exactly to enter. Do you wait until the second bottom is formed and then enter as it rises?
[B]Power Course Instructor’s Response:[/B]
Essentially yes…
Wait until the support level is tested for the second time and then take a long position with a stop just below the lowest level at which the pair traded in the pattern.
Take a look at the chart below for a visual explanation.
This particular chart offers, potentially, two double bottom patterns…one of a smaller scale and one of a larger scale…the smaller within the larger. Again, refer to the chart below for a visual.
A textbook double bottom will form the capital letter “W” with its price action. Note the two “W” formations on the chart below…green representing the smaller double bottom pattern while brown represents the larger.
