How to trade the double bottom on XAUUSD

A double bottom is two attempts to push lower that both fail near the same price, with a relief rally between them. A break above the high of that relief rally confirms that sellers ran out of supply at the level.

The pattern is more reliable at clear daily or 4-hour support than at random intraday lows. On XAUUSD specifically, round numbers, prior session lows, and visible swing points are where double bottoms tend to work.

Look for context before symmetry.

• Established downtrend leading into the first low
• Relief rally between the lows is a real move, not a single-bar bounce
• Second low within a tight band of the first — slight undershoot (sweep) is often the cleanest version
• Momentum visibly weaker on the second push down
• Neckline is the high of the rally between the two lows

Aggressive: buy the second low as it rejects support. Standard: buy a close above the neckline. Patient: buy the retest of the neckline from above. The patient entry has the best risk-to-reward but the lowest hit rate, because gold often does not give a clean retest after breaking out.

Stop goes below the second low for the aggressive entry, below the retest swing for the patient one. Target the height of the pattern measured up from the neckline, or the nearest resistance from prior structure.

The usual ways double bottoms turn into traps:

• The second low is part of a larger continuation — downtrend resumes after a deeper third push
• Neckline break happens on thin liquidity and immediately reverses
• Trader mistakes a small pullback in a downtrend for a double bottom on a low timeframe
• The level was support only in retrospect — no real reaction the first time price visited it

Find a stretch of XAUUSD history where the daily chart shows a major low, then drop to the 1-hour and step bar by bar through the bottoming process. Mark when you would have called the double bottom in real time, not where you can see it now.

Then run the same drill in a strong downtrend and see how many times the pattern almost forms but continues lower. That is where most of the loss-prevention learning happens.