Education & Information
Sell Signals
Double Bottom
The double bottom is the most basic sell signal. In fact, all other sell signals are an extension from the double bottom. It is also the most common sell signal. Typically, this pattern occurs while the major trend is down in a stock (see major trends). The double bottom means that supply continues to be stronger than demand and the down trend is continuing. It rarely will occur at a turning point from demand being in control and the trend changing to supply being in control. Usually, changes in trend take time to develop and simple double bottoms are not strong enough to suggest a major turning point in a stock. Because it is not a strong sell signal, one should not sell all of their position in a stock that breaks a double bottom solely because this pattern is broken. Other patterns that take longer to develop are more significant sell signals that should be acted upon.