Overview
After the close of 4/23/2021, the W Double Bottom pattern is visible on both the daily and hourly SP 500 FUTURES Renko charts. However, confirmation is lacking because the index failed to close above the most recent all-time high close, 4176. The W-shaped double bottom might be verified by the end of the week.
What’s Next
The 4176 level is critical. It will either become a support or a resistance level. Given the current positive market sentiment, 4176 is expected to become the support level. On the down side, the 4128 double bottom should offer solid support. On the upside, If the W double bottom pattern in SP 500 Futures is confirmed, the index could rise quickly. Because 4200 is a round number, considerable resistance is expected in its vicinity.
This is the daily SP 500 FUTURES Renko chart.
What Is the W Pattern Double Bottom?
The low is tapped twice, forming a pattern that resembles the letter “W.” The low is seen as a support level and a bullish pattern in technical analysis. The W or Double Bottom pattern does not offer a 100 percent accurate bullish signal. Nonetheless, it is fairly accurate, about 75 to 80 percent of the time. Traders who prefer to proceed more cautiously should wait for price confirmation. The prior high acts as a new support level after the price has risen above it. If the new support level is retested, it strengthens the signal even further.
Traders should remember that to avoid a fake breakout, they need to be patient and wait for pattern confirmation. When a breakout of the A false breakout may occur if the neckline of a W-shaped double bottom pattern is not confirmed. An early opening of a long position will result in losses. A complete double bottom happens when prices climb above the highest point of the whole formation and are able to close above it. If recognized in time, a double bottom can be an excellent buying opportunity. Now that the price has stabilized at a key support level, it’s unlikely that it will go down any further.