The bottom (bottom) is the lowest point of an asset's price decline over a certain period of time, after passing which the price begins to move upward or, at the very least, stops decreasing. The concept is actively used in technical analysis and trading to describe the lower boundary of a price movement, where selling pressure gives way to buyer interest.
Identifying the bottom has practical significance: near it the price is considered relatively low, which potentially creates conditions for buying. However, pinpointing the moment the bottom forms in real time is extremely difficult — it becomes obvious only after the reversal. The attempt to guess the minimum, which traders call bottom-fishing, is associated with high risk, since the downward movement may continue.
Signs of a possible bottom
- A slowing of the pace of the price decline;
- An increase in trading volumes at the reversal;
- The formation of characteristic chart reversal patterns;
- Signals from technical indicators about oversold conditions.
The opposite of the bottom is the top — a local or global price maximum. Competent work with levels relies on an analysis of a combination of factors rather than a single signal.
