Double Top

From Forexpedia

The chart pattern known as ‘Double Top’ (along with double bottom) is arguably one of the most widely recognised and compelling techniques known among the forex trading community and are considered a reliable test of a previous high or low.

The double top formation is identified as a distinctive chart pattern revealing a rally to new high followed by a moderate retreat which is then in turn followed by a second rally in which to test the new high.

The double top chart pattern classically reveals itself by occurring in the shape of the letter ‘M’. A third rally added to this would result in the occurrence of a triple top resulting in three peaks, or lows.

A double top is considered a bearish trend and is generally thought to be stronger when the equal points are further apart and the price objective usually occurs at an equal distance beyond the correction low. It is important to note however that double tops are not as strong in uptrend as they are when occurring in downtrend.