Caxton, here are some comments on double bottoms from Edwards and Magee, 8th edition, p134 ff:
"True double tops and double bottoms are exceedingly rare....the true patterns can seldom be positively detected until prices have gone quite a long way away from them. They can never be foretold or identified as soon as they occur, from the chart data alone."
I wonder why they are so rare? Is it because they only occur at major reversal points, and major reversal points are rare, and can be signalled by other chart formations besides a double top or bottom?
It seems that these formations cannot be identified until after they occur because, as you note, we need to see a break of the prior peak at 62 (for qcom) before we could identify the recent low as part of a double bottom. Although for qcom, perhaps the break of the declining trendline at the low 50's would also be a good signal, since if we broke thru there, we would likely move quickly up to the low 60's.
Some criteria they list for a double bottom: the pattern takes time to evolve, several months usually rather than several weeks. The pattern has dull rounded shapes rather than sharp moves. The price change is usually 20% or more from peak to trough. The second low often exceeds the first low by a few percent. ...So far we meet the criteria.
Volume should increase as the stock rallies from the second low, we have not seen this yet.
Here's hoping for a good rally....'bottoms up'....:)
Robin |
