Double bottom

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Double bottom

A term used in technical analysis to refer to the drop of a stock's price, a rebound, and then a drop back to the same level as the original drop. The pattern looks like the letter W. In technical analysis, this pattern is considered a positive for the stock. The stock has bottomed out and the technical analysts would expect the stock to appreciate afterwards.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Double Bottom

In technical analysis, a situation in which the price of a security hits a low, rises 10-20%, and then hits roughly the same low before rising again. A double bottom in a relatively short period of time indicates that the low is a price support for the security. A situation where trading volume rises as the security increases from the second bottom is thought to be a bullish indicator. See also: W-shaped recovery.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

double bottom

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double bottom
In technical analysis, a chart formation indicating stock price recoverability over time. It is characterized by a drop in a stock's price to a low level, a recovery in price, and a second decline to the previous low price. If the stock price recovers a second time, the low price reached at the two bottoms becomes a level of support for the stock. It is a bearish sign if the stock subsequently falls through this level. Compare double top.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Double bottom.

Double bottom is a term that technical analysts use to describe a stock price pattern that, when depicted on a chart, shows two drops to the same dollar amount separated by a rebound.

For example, if a stock that had been trading at about $28 a share dropped to $18, rebounded to trade at about $22 for several weeks, and then dropped to $18 again, analysts would identify $18 as a double bottom.

An analyst observing this pattern might conclude that investors were comfortable paying $18 for the stock, and that the price might not drop below that level in the near term. In technical terms, the analyst would say that there was support for the price. However, there's no guarantee that it might not drop further and hit a new low.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Double bottoms are a strong technical sign that prices have reached their lows, as are future position reductions by commercial hedgers.
On Thursday a double bottom was formed above $34.00/bbl; and Friday's trading showed a double bottom above $36.00/bbl, at which point crude rallied to close at $38.94/bbl.
In order to explore the detection of corrosion in the space between double bottoms, a series of laboratory tests were conducted.
The laboratory tests performed indicated the possibility of detecting corrosion occurred in the space between double bottoms. However, the specific conditions had to occur.
Both new as well as modernized tanks have the leakage problem in the space between double bottom and the corrosion problem within this space.
For these variants of contact of metal plates the tests were conducted on especially prepared samples of metal plates simulating the construction of the double bottom. The laboratory test in the first variant of plate contact gives good results for detecting corrosion sources from outside bottom.
Yet, while both chambers preferred to achieve the bill's ends through multilateral action, the Senate alone expected the Coast Guard to promulgate regulations governing tanker design to include double bottoms. The Senate's attitude fueled fears that the United States would act unilaterally if international negotiations were unsatisfactory.
This provided clear evidence to oil majors and the shipping industry that the United States would force changes in tanker construction--if not necessarily the double bottoms requirement.
Why did the maritime states and industry feel confident resisting double bottoms but not SBT?
Rather, "international negotiations tend to evolve to a final product--in the case of MARPOL '73, in the course of a month in the Dean's Yard at Westminster Abbey--as arguments are exchanged, national capitals consulted and noses counted."(67) McManus relates that gaining extension of the treaty to refined oils and other objectives justified accepting the treaty without double bottoms.