What is a double top pattern?

by gabriel.kutch , in category: Stocks and Equities , 8 months ago

What is a double top pattern?

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1 answer


by andy , 8 months ago


A double top pattern is a technical analysis chart pattern that signals a potential reversal in an upward price trend. It consists of two peaks (or tops) of similar height, separated by a low point or a price range called the neckline. The pattern resembles the letter "M".

The double top pattern suggests that after an extended uptrend, the buying pressure becomes weaker and the price struggles to surpass the previous high level. This creates resistance, causing the price to fall back to the neckline. If the price breaks below the neckline, it indicates a bearish signal and the possibility of a trend reversal, potentially leading to further price decline. The pattern is confirmed when the price drops below the neckline, ideally with increased trading volume.