The double top and double bottom are simple, common reversal patterns. They show price failing twice at the same level, which can mean the trend is running out of strength. They are found on stock, crypto and forex charts.
Double top (bearish)
Price rises to a high, pulls back, then rises again to roughly the same high and fails. The low between the two peaks is called the neckline. The pattern is generally treated as complete when price closes below the neckline, suggesting the uptrend may have ended. In Urdu terms, buyers tried twice to break the chhat (ceiling) and failed.
Double bottom (bullish)
The mirror image after a decline: price falls to a low, bounces, falls to roughly the same low again and holds. A close above the high between the two lows (the neckline) is the key event, suggesting the downtrend may have ended.
What makes these patterns more reliable
- A clear prior trend
- Some time between the two peaks or troughs, not just a few candles
- Higher volume when the neckline breaks
- Momentum divergence on RSI or MACD at the second peak or trough
A common beginner mistake
Calling a double top as soon as price touches the old high a second time. Until the neckline breaks, it may simply be resistance that will later break upwards.
Related: triple top and triple bottom and our chart patterns guide.
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This article is for education only and is not investment advice. Trading shares, cryptocurrencies, forex and other markets involves risk, including the loss of capital.