Double Top Pattern
The double top is a major top reversal pattern that forms after an extended up trend. As its name implies, the pattern is made up of two well defined sharp peaks at approximately the same price level.
A double top occurs when prices are in an up trend. prices rise to a resistance level, retreat, return again to the resistance level before going into a sustained decline. the two tops are usually distinct and sharp. The pattern is completed when the price declines below the lowest low in the formation. the lowest low is called the confirmation point.
According to the well-known technical guru, john murphy, the double top is one of the most frequently seen and most easily recognized patterns.
The Double Top looks line the Letter “M”. the twice-touched high is considered a resistance level. Although there can be variations., the classic double top marks at least an intermediate, if not a long term, reversal in trend from bullish to bearish. Many potential double tops can form along the way up, but a reversal cannot be confirmed until the key support is broken.
Double Bottom Pattern
The double bottom is a major bottom reversal pattern that forms after an extended down trend. As its name implies, the pattern is made up of two well defined lows at approximately the same price level.
Prices fall to a support level, rally and pull back up, then again fall to a support level before rising. The pattern is completed when the price rises above the highest level in the formation. The highest level is called the confirmation point.
Although there can be variations, the classic double bottom usually marks either an intermediate or a long term reversal of a down trend. Many potential double bottoms can form along the way down, but a reversal cannot be confirmed until the key resistance is broken.
The Double Bottom looks line the Letter “W”. The twice-touched high is considered a support level.