Double Tops & Bottoms - Advanced Analysis | Educational

10 sept 2022

No chart pattern is more common in trading than the double bottom or double top. This pattern appears so often that it alone may serve as proof positive that price action is not as wildly random as many Traders claim. Price charts simply express trader sentiments, demand, and supply, so the double tops and double bottoms represent a retesting of temporary extremes. If prices were truly random, why do they pause so frequently at just those points? To traders, the answer is that many participants are making their stand at those clearly demarcated levels.

1. Double Tops

Double tops are a bearish pattern commonly found in uptrends and characterized by two consecutive peaks located at an approximately similar level, separated by a trough.



Here we can see a good example of a Double Top in GBP/USD in August 2022, in the recent past.

The Price forms a "V shape" as a Double Top, then there is a breakout of the confirmation Line, we can call this also a " Neckline " for a continuation of the price.

2. Double Bottoms

Double bottoms are a bullish pattern commonly found in downtrends and characterized by two consecutive troughs located at an approximately similar level, separated by a peak.



The Double Bottom is always formed by a V shape, the figure it's just a Mirrored shape of the Double Top. Also for the Double Bottom, there is a breakout confirmation Line.

3. Take Profits

For double tops, the take profit is determined from the height Peak to the trough. This measurement will be copied from the confirmation line ( breakout )to below.



For double bottoms, the take profit is determined from the lowest trough to the peak. This measurement will be copied from the confirmation line ( breakout ) to the upper.r.