Double Top Pattern - How to Trade Double Top Pattern for Trend Reversal

Double Top Pattern – Double Top Patter is a bearish pattern and it’s look like M letter, Double Top Patter has two picks at same label, at the end of the left top a small correction is placed, and it take support on a line. The right top is form with a rally and correction takes support at the same label (neckline), breaching the neckline is a confirmation of the pattern and we can initiate short sell position when prices breach the neckline.

Initiate the Trade

• Entry - When prices breach the neckline we initiate the short sell position.
• Stop loss - The stop loss should be placed above the right top or 5% of prices whichever is less.
• Target - Target is the same distance from the second top to neckline.

Double Bottom Pattern

Double Bottom Pattern is an inverse of Double Top Pattern and it's look like W letter. The Bottom take support at same label, with the breach of neckline we initiate log position

Initiate the Trade

• Entry - When right shoulder break up the neckline, it's the confirmation of pattern and we can enter the long position.
• Stop loss - The stop loss should be placed bellow the right bottom or 5% of prices whichever is less.
• Target - Target is the same distance from the right bottom to neckline.