Double Tops and Bottoms Price/Chart Pattern

A double top consists of two peaks separated by a reaction or valley in prices.

Double tops and bottoms main characteristic is that the second top is formed with distinctly less volume than the first. It is normal for both peaks to form at the same price level, but it is also possible for the second peak to slightly exceed the first or to top out just a little below it. Remember, this is not an exact science, but a commonsense interpretation of a battle between buyers and sellers.

Minimum downside measuring implications for double tops are similar to Head and Shoulders (H&S) patterns. A double bottom is typically accompanied by high volume on the first bottom, very light volume on the second, and very heavy volume on the breakout Usually, the second bottom is formed above the first, but these formations are equally valid whether or not the second reaction reaches (or even slightly exceeds) the level of its predecessor.

Double patterns may extend to form triple tops or bottoms, or sometimes even quadruple or other complex formations.

The measuring implications of all these patterns are derived by calculating the distance between the peak (trough) and lower (upper) end of the pattern and projecting this distance from the neckline.