What is Double Top Pattern?
A double top chart pattern is a bearish reversal chart pattern that is formed after an uptrend. This pattern is formed with two peaks above a support level which is also known as the neckline.
The first peak is formed after a strong uptrend and then retrace back to the neckline. After reaching back to its neckline, the price becomes bullish and rises again to form the second peak. The formation of this pattern is completed when the prices move back to the neckline after forming the second peak.
When the prices break through and closed (daily) the neckline or the support level then the bearish trend reversal is confirmed.
# Trading with Double Top:-
*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 only enter the short position when the price break and closed in daily time frame below the support level or the neckline.
# Stop Loss:
In the case of a Double Top chart pattern, the stop loss should be placed at the second top of the pattern or as per your risk reward.
# Price Target:
The price target should be equal to the distance between the neckline and the tops.
Kindly Let us know if you have any question .
Thank you .
A double top chart pattern is a bearish reversal chart pattern that is formed after an uptrend. This pattern is formed with two peaks above a support level which is also known as the neckline.
The first peak is formed after a strong uptrend and then retrace back to the neckline. After reaching back to its neckline, the price becomes bullish and rises again to form the second peak. The formation of this pattern is completed when the prices move back to the neckline after forming the second peak.
When the prices break through and closed (daily) the neckline or the support level then the bearish trend reversal is confirmed.
# Trading with Double Top:-
*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 only enter the short position when the price break and closed in daily time frame below the support level or the neckline.
# Stop Loss:
In the case of a Double Top chart pattern, the stop loss should be placed at the second top of the pattern or as per your risk reward.
# Price Target:
The price target should be equal to the distance between the neckline and the tops.
Kindly Let us know if you have any question .
Thank you .