DOUBLE TOP PATTERN

 

What Is a Double Top Pattern?

A double top is an extremely bearish technical reversal pattern that forms after price reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the price falls below a support level equal to the low between the two prior highs.

What do Double Tops and Double Bottoms tell?

 A double top and double bottom pattern indicates possible trend reversal to the traders. Like other technical indicators and chart patterns, the double top and double bottom patterns do not indicate certain trend reversals. Traders should always use the chart patterns with other indicators such as volume for confirming the reversal before taking a position. Trading with Double Top: 

There are certain rules when trading with Double Top  patterns. 

 Firstly one should see the market phase whether it is up or down. As the double top is formed at the end of an uptrend, the prior trend should be an uptrend. Traders should spot if two rounding tops are forming and also note the size of the tops. Traders should only enter the short position when the price break out from the support level or the neckline.