Doble Top Description
The Double Top is a chart pattern of high reliability which is formed in bullish markets and precedes a change in trend from bullish to bearish. Generally, double top will begin with a rise in price and it will gradually exhibit a drop. It will further increase in price within the similar level of the original rise, and make a drop further.
This chart patterns is quite similar to the alphabet ‘M’, where there is a rise, dip, rise and again a dip. It is essential to mark the initial trend of the pattern which has to be formulated on a long-term base. The downside will occur further and it is described as trough. Basically, the downside will be in a limit of 10 – 20% and it will persist with a negligible rise and fall until the 2nd height in pricing rise. This increase will roughly be the same when compared to the initial peak. Moreover, the volume of the demands will likely be lesser when compared to the supply during the next turn down. This formation is the opposite of the Double Bottom pattern.
The exact pattern of the double top will endure in the following method:
- The Prior Trend
- The First Peak
- The Trough
- The 2nd Peak
- The declination from the 2nd peak
The chart pattern will look very simple and outright, however while you spread the betting techniques you need to make sure that you don’t jump into it very soon. Make sure that you don’t make double tops that are deceptive, as it should at least be 1 month between the peaks.
Example of Double Top Pattern