How to Trade Double Top Pattern: Your Complete Guide to Consistent Profits Forex Trading Strategy
When a double top or double bottom chart pattern appears, a trend reversal has begun.
Let’s learn how to identify these chart patterns and trade them.
Double Top
A double top is a reversal pattern that is formed after there is an extended move up.
The “tops” are peaks which are formed when the price hits a certain level that can’t be broken.
After hitting this level, the price will bounce off it slightly, but then return back to test the level again.
If the price bounces off of that level again, then you have a DOUBLE top!
Double Top
In the chart above you can see that two peaks or “tops” were formed after a strong move up.
Notice how the second top was not able to break the high of the first top.
This is a strong sign that a reversal is going to occur because it is telling us that the buying pressure is just about finished.
With the double top, we would place our entry order below the neckline because we are anticipating a reversal of the uptrend.
Double Top Breakdown
Wow! We must be psychic or something because we always seem to be right!
Looking at the chart you can see that the price breaks the neckline and makes a nice move down.
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