Double floor

Double floor

By Boltvitaps | Trading Course | 26 Apr 2020


The double floor, which occurs when there is a downtrend and reaches a point where the minimum does not exceed the previous minimum, thus causing a support in that area.
This is a sign that a trend change may occur, from bearish to bullish.

The second time the price reaches the area, we must see what can happen: if it breaks the support;
or if it bounces like it did the first time.
We must wait for the Japanese candle to finish forming (regardless of the timing in which you are working).
We have to consider:

a) If the candle crosses the support area, but closes above the support, we may have an indication of a false break.

b) If the price rose previously and retests the support area, it is most likely to rise again.

 

First floor

At this time, nothing should suggest that the trend is in danger, since it is a normal drop.
With an increase in volume.


Valley

After the first minimum occurs, a valley is formed.
It is a bullish move without too much volume.
Mark the upper part of the double floor, the neck line and the area to overcome.


Second floor

It must have a smaller volume than on the first floor.
Volume differences between minima is a desirable condition, but not a must.

Although the ideal is that the minimums are at the same height, different situations can occur, such as the second being higher or lower than the first.


Confirmation of a double floor

A double floor is not confirmed until the neck line has not been broken.

This neckline is the resistance of the "W" that has formed.
The double bottom is also known as the letter W. In the following image you can see the double bottom that we had before, but now the neck line or the W is shown where it really confirms the uptrend.

 

The “theoretical” movement or the expected price movement is obtained by measuring the height of the pattern, and transferring that height to the break.
That is, the height between the double bottom line and the neck line.

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Boltvitaps
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