From Double Bottom Pattern to Profit: Walking Through the Charts of a +30% Gain in $TSLA
Have you ever wondered how successful traders manage to find profitable setups even when the market appears uncertain? Today, we walk you through the charts of our recent Wagner Daily swing trade that led to a whopping +30% gain in Tesla ($TSLA)—all thanks to a powerful chart pattern known as the double bottom.
The double bottom pattern, which emerged in the trading chart of $TSLA, played a pivotal role in identifying an opportunity that led to massive profits for swing traders. If you’re searching for concrete, real-world examples of successful swing trades, don’t miss this deep dive into how the double bottom strategy led to a big winner in $TSLA.
Prepare to delve into the nitty-gritty of our swing trading strategy as we dissect the proper entry and exit points of the double bottom pattern that powered a stellar +30% gain. Are you ready to unlock the power of simple and effective chart analysis? Let’s get started.
Unraveling the $TSLA Trade: The Setup
Earlier this year, Tesla’s stock price shot up from the lows, posting an impressive +100% gain in only six weeks, before hitting a temporary ceiling just above $200. After such a meteoric rise, a period of price consolidation (correction by time) is typically expected.
Over the following months, we noticed that $TSLA began forming a double bottom pattern that spanned 15 weeks, and with a depth of about 30%. This “W-shaped” double bottom pattern is often a reliable signal of an upcoming bullish trend reversal.
Continue reading to discover how to trade double bottom pattern, as we walk you through our actual entry and exit points of our winning $TSLA swing trade.
What is a Double Bottom Chart Pattern?
Is Double Bottom Pattern Bullish or Bearish?
The “double bottom” is a powerful and reliable bullish chart pattern that often signals an upcoming bullish trend reversal. The pattern is effective on multiple time frames and can be easily identified by a few key points.
How to identify a double bottom pattern?
– An initial drop in price
– A rebound (bounce)
– Another drop to the same or similar level as the first drop
– Finally, a second rebound
The double bottom pattern essentially forms a “W” shape, signaling a potential bullish reversal after a downtrend. This pattern emerges when the price reaches a support level twice and rebounds each time.
The “bottoms” are the two low points that the price hits before bouncing back—support levels where the stock price stops falling because demand exceeds supply. It’s a point where buyers start stepping in again, seeing value in the stock at these levels.
In a classic double bottom pattern, the second low is slightly lower than the first. This tends to shake out the “weak hands,” or short-term traders who set their stops near the previous low. When these stops get triggered and these traders exit, it removes a significant amount of potential selling pressure (supply), allowing the price to rebound faster.
How to Identify Double Bottom Pattern Entry and Exit Points
Spotting a proper double bottom requires a keen eye and patience. After the first bottom, the price will rally a bit, but then stall and start to decline again. The second decline should stop at roughly the same level as the first bottom—note that an undercut below the prior low (“stop run”) is common. This second drop and subsequent reversal confirm the double bottom pattern.
The “neckline” of the double bottom pattern is the peak between the two bottoms. A break above this line confirms the pattern, signals a bullish trend reversal, and is often the ideal buy point for swing traders.
On the weekly chart of $TSLA below, we labeled the neckline as “buy point”—the swing high between the two lows (just below $210):
$TSLA Double Bottom Setup from Entry to Exit: The Winning Result
On June 1, we alerted members of our swing trade alerts service that $TSLA triggered our entry at $208.49 (breakout above the “buy point”). Tesla never looked back thereafter, and the powerful double bottom pattern began showing its awesome potential. Riding along with the broader market uptrend, $TSLA exploded +30% higher in just 4 weeks.
When the price surged +5% on June 20, we seized the opportunity to raise our stop on partial position size to $273. This enabled us to lock in an exciting +30% gain on $TSLA if the stop triggered, which happened the next morning.
The chart below shows the monstrous breakout $TSLA has enjoyed since triggering our double bottom buy point:
Since we only sold partial size of $TSLA in The Wagner Daily portfolio, our members are still holding the remaining position size from our June 1 entry. Our plan is to maximize profits with a trailing stop strategy, based on support of the 8-day and 20-day moving averages as a guide to take profits.
Join the MTG Tribe, Learn to Trade With Confidence
Success stories like our $TSLA trade aren’t rare occurrences at Morpheus Trading Group (MTG)—rather, they’re the product of a proven swing trading system and a tight-knit community of savvy traders. Our founder, Deron Wagner, has been leading the way with MTG’s winning stock picks, best-selling trading books, and powerful MTG Masterclasses.
With continuous publication since 2002, The Wagner Daily PRO service has helped tens of thousands to make profitable trades, trade with confidence, and become their own success story. By signing up, you’re not only getting access to real-time stock trade alerts sent directly to your phone, but you’re also joining the MTG Tribe—a friendly community of traders on the same journey towards swing trading mastery.
Our flagship Swing Trader chatroom fosters an environment where ideas and strategies are shared, discussed, and refined. In this dynamic community, you can interact with fellow traders, learn from their experiences, and share your own.
So, are you ready to write your own trading success story? Join The Wagner Daily PRO service today. It’s not just about trading; it’s about becoming part of a tribe that thrives on market opportunities. After all, your next winning trade could be just a click away.
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