DOUBLE TOPS AND BOTTOM
DOUBLE TOPS AND BOTTOM These are considered to be among the most familiar of all chart patterns and often signal turning points, or reversals. The double top resembles the letter “M”. Conversely, the double bottom resembles a “W” formation; in reverse of the double top. DOUBLE TOP It is a term used in technical analysis to describe the rise of a stock, a drop and another rise roughly of the same level as the previous top and finally followed by another drop. A double top is a reversal pattern which occurs following an extended uptrend. This name is given to the pair of peaks which is formed when price is unable to reach a new high. It is desirable to sell when the price breaks below the reaction low that is formed between the two peaks. Context: The double top must be followed by an extended price rise or uptrend. The two peaks formed need not be equal in price, but should be same in the area with a minor reaction