Over the last month,  alot of stocks that have been falling are starting to show signs of a decrease in the downward momentum.

OST is one of those stocks. It has formed a potential Double Bottom (DB), which can be a reversal signal. Firstly, let’s define what a double bottom is. The double bottom is a major reversal pattern that forms after an extended downtrend. As its name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between.

Now looking at the OST daily chart, there are two parts that can be traded.

The more aggressive trader will note two equal lows at a major weekly support level of around $2.90. If a Bullish up day with higher volume than the previous day appeared, and all relevant indicators were bullish, this could be an entry with a target of $4.10 – the neckline and also a major weekly resistance.

A conservative trader may like to wait for the neckline to be breached with a bullish up day, higher volume than the previous day and all relevant indicators being bullish. It could be expected that the stock may run to $5.35, which is the distance between the Double Bottom and the Neckline, travelled again from the neckline breakout to the target.
(click on image to enlarge)