A “W” Pattern Formed On The DOW Today

A “W” Pattern Formed On The DOW Today
December 27 03:30 2018

The Double Bottom Reversal, also knows as a “W” pattern, is a bullish reversal pattern.  As its name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between.

It’s a pattern that I look for when price enters a higher time frame demand or supply zone on a monthly, weekly, or daily chart. Over the past week, I have been talking about the US equity markets and that they were due for relief rally because on the S&P 500, 89% of the stocks were below their 200 day moving avg. and 38% of the stocks had reached a 52 week low.

I believe we saw the start of the relief rally today when the DOW rallied more than 1000 points, the largest one day point gain in DOW history. But let me share with you what I was looking intra-day.

On the monthly chart, price penetrated roughly 50% of the monthly demand at 21700.

The the 15 min chart told the story of the day.

The “W” patterns (and “M” pattern, a bearish signal) were introduced to me a couple months ago. Today was a great example of the “W” pattern in action.

When you combine the “W” pattern with negative divergence, it’s it makes for a very high reward, low risk set-up, hence a 1000 point move today in the DOW.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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I'm a retail investor like most of you and learning everyday, but I have been educated and trained to identified the Smart Money on the charts to pick up whatever crumbs they leave behind.

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