The Difference Between "Two Legs" and "W Bottom"

Special Emphasis: This chart is only used to illustrate the difference between the two. "Two Legs" is just a buy signal in my pattern, not the entire pattern. Don't focus solely on spotting "Two Legs."

As shown in the chart, the black solid line represents the price movement visible at your entry point, while the red dashed line represents the movement that hasn't happened yet but might occur. The red K indicates each "confirmation K."

So, when you see the "Two Legs" pattern forming, you can't tell at that moment whether it will develop into a "W Bottom."

Main Differences:
1. Different Confirmation Methods: "Two Legs" is confirmed by a reversal K at the second leg, while "W Bottom" is confirmed by a breakout K at the neckline.
2. Different Entry Methods: You can think of "Two Legs" as bottom-fishing for this small pattern, while "W Bottom" is trading the breakout of this small pattern.
3. Different Stop-Loss Sizes: The stop-loss amount is the distance from the red K ("confirmation K") to the stop-loss level. The stop-loss in the "Two Legs" pattern is much smaller.

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