Double Top Chart Pattern

What is a Double Top Chart Pattern? A double top is a reversal pattern that occurs at the peak of an upward trend and can mark the beginning of a downward trend.

How Do I Recognize a Double Top Chart Pattern?

A double top chart pattern occurs in four stages:

1. Price reaches a new high
2. The trend faces resistance and sells off to support.
3. The price begins to move back to resistance, but another sell off occurs, meeting support again.
4. The price falls below support, establishing a downward trend

What Does a Double Top Chart Pattern Mean?

A double top chart pattern can point to a tug of war between buyers and sellers. While buyers try to push the contract, sellers resist the upward trend. When once again the top of the pattern isn’t broken, The buyers begin to back off, leading the sellers to dominate and send the trend downward.

Watch volume in this scenario, as it is likely to increase once the contract is below support. This support level may now become a new resistance level in the new trend.

Note that a similar chart pattern is the Big M, which has all the principles of a Double Top, but with much steeper moves.

George Kissi

Simple Day Trading System

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