What is Double Top Pattern?

Double Top Pattern

What is Double Top Pattern?

The Double Top pattern is a bearish chart pattern in technical analysis that signals a potential trend reversal from an uptrend to a downtrend. It is formed by two peaks of similar height, with a valley in between. The pattern indicates that the price has tried and failed to break through a resistance level twice, and is now likely to turn downward.

 

Traders typically identify the Double Top pattern by drawing a horizontal line connecting the two peaks, which forms a resistance level. The pattern is confirmed when the price breaks below the support level, which is the valley in between the two peaks, on higher-than-average trading volume.

 

Traders often use the Double Top pattern as a signal to sell, with a price target set based on the distance from the support level to the top of the peaks. It is important to note that not all Double Top patterns will result in a trend reversal, and traders should use caution and consider other technical indicators and market factors before making any trading decisions based solely on this pattern.

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