Double Top Chart Pattern
What is a Double Top Chart Pattern? A double top is a retrogressive pattern that happenss at the top of an ascending trend and can represent the introduction of a declining trend.
How Can I Pinpoint a Double Top Chart Pattern?
A double top chart pattern happens in four stages: 1. Price gets to a new high 2. The trend reaches resistance and sharply reverses to support 3. The price starts to move back to resistance, but another sell off takes place, meeting support again 4. The price plummets through support, establishing a downward trend
What Does a Double Top Chart Pattern Symbolize?
A double top chart pattern can point to a tug of war between buyers and sellers. While buyers try to push the contract, sellers resist the upward trend. When once again the top of the pattern isn’t broken, The buyers begin to back off, leading the sellers to dominate and send the trend downward.
Watch volume in this scenario, as it is likely to increase once the contract is below support. This support level may now become a new resistance level in the new trend.
Observe that a similar chart pattern is the Big M, which has all the principles of a Double Top, but with greater dizzying moves.
