Double Bottom and Double Top trend reversal patterns
Double Bottom and Double Top trend reversal patterns appear on the price chart quite often, and on any time interval. In technical analysis they are quite a strong sign of a trend reversal. The "Double Bottom" pattern is formed in a downtrend, and the "Double Top" pattern - in an uptrend.
Formation of a technical figure "Double Top"
Let's look at the picture that shows an example Double Top" trend reversal patterns. The price, having overcome the resistance level, reaches a certain maximum, after which it rolls back to the previous resistance level, which is already support for the TA figure "Double Top".
The price pushes away from this support and makes a second attempt to rise, but, not being able to break through the maximum of the first top, it begins a second decline, but more active. And rather quickly the rate of the asset falls below the support level, often testing it afterwards from bottom to top, and starts to fall steadily.
Trading on the "Double Top" trend reversal pattern
It is better to enter the market when the support level is broken after the unsuccessful second peak and the price bounces down from the support level, because it is possible that the price can go back to the maximum to form Triple Top models.
It is better and safer to set the stop loss behind the maximum of the double top, and the goal to measure from the support line to the maximum of the two peaks.
Double Bottom Technical Analysis Figure is built in a mirror image with the same order of actions.
