Double Bottom Chart Patterns

There are three favorable Chart Patterns to look for as an investor.  They include the "Cup and Handle", "Double Bottom" and "Flat Base".  This article will concentrate on the "Double Bottom" pattern which looks like the letter "W" as it develops.  An example of a stock which had formed a Double Bottom pattern before breaking out to new 52 week highs was NVR in 2002.

NVR peaked in the Spring of 2001 and then sold off before making its 1st bottom in June (point A).  From there it rallied into July (point B) but then sold off again and made a 2nd bottom in September (point C).  After making the 2nd bottom NVR then rallied strongly again before stalling out near its previous Spring 2001 high and completed its Double Bottom "W" pattern.  NVR then traded nearly sideways for 6 weeks and formed a Handle (H) before breaking out in late January of 2002 accompanied by strong volume (point D).   

Each week we look for stocks which are exhibiting favorable chart patterns that have good Sales and Earnings Growth which may break out in the future and undergo significant price appreciation.