Some stocks cannot be pulled up overnight after being washed up. If there are many trapped players at a certain price, in order to get these trapped players out at a low level; Or in the process of washing the market and exploring the bottom, others may find a large number of cheap chips, and in order to profit from these chips, it is usually necessary to conduct a second bottoming out while testing the support strength of the previous low point. For us, discovering a second dip in stocks can be absorbed during the second downturn.

Like a V-shaped reversal, when a stock continues to fall to a certain price, it will quickly pull back. After reaching a certain price point, the stock falls back again, but this time it no longer hits a new low and forms an upward trend near the previous low point. The K-line chart forms the shape of the English letter W, also known as the "W base". The position of its neck line is a straight line drawn by the convex point formed by the first reverse drawing.

After the completion of the double bottom, if the breakthrough above the neck line exceeds 3% of the stock market price, it is an effective breakthrough. The minimum increase after measuring the double bottom can be calculated by subtracting the lowest point from the neckline price, and this price difference plus the price at the neckline level is the target level after breaking through. In practical cases, some increases are even higher, reaching 1.618 times or 2 times the distance between the lowest price and the neckline.

In fact, the double bottom is a further deepening of the V-shaped reversal. Why is there a second pullback? On the one hand, this is because during the suppression process, some investors have already absorbed some chips at low levels. In order to eliminate these chips early, another suppression is necessary. On the other hand, there are also many people trapped in a certain price range, and it is necessary to lure them out instead of attacking forcefully.

When using a dual bottom to select individual stocks, attention should be paid to:

A double bottom is not necessarily a reversal signal, sometimes it can also be a consolidation pattern. If two bottom points appear very close in time and there is only one secondary rise between them, most of them belong to a consolidation pattern and will continue to move in the original direction of stock price changes.

On the contrary, the two bottom points are generated at a very long time apart, and after several secondary rises in between, there is a higher possibility of forming a reversed shape.