Double Top Reversal - ChartSchool - StockCharts

Double Top Reversal - ChartSchool - StockCharts - Double...

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18/2/2014 Double Top Reversal - ChartSchool - StockCharts.com 1/4 StockCharts.com - ChartSchool Learn more about Technical Analysis and Charting Terminology You are here: StockCharts.com » ChartSchool » Chart Analysis » Chart Patterns » Double Top Reversal Advertisement Double Top Reversal The Double Top Reversal is a bearish reversal pattern typically found on bar charts, line charts and candlestick charts. As its name implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between. Note that a Double Top Reversal on a bar or line chart is completely different from Double Top Breakout on a P&F chart. Namely, Double Top Breakouts on P&F charts are bullish patterns that mark an upside resistance breakout. Although there can be variations, the classic Double Top Reversal marks at least an intermediate change, if not a long-term change, in trend from bullish to bearish. Many potential Double Top Reversals can form along the way up, but until key support is broken, a reversal cannot be confirmed. To help clarify, we will look at the key points in the formation and then walk through an example. 1. Prior Trend : With any reversal pattern, there must be an existing trend to reverse. In the case of the Double Top Reversal, a significant uptrend of several months should be in place. 2. First Peak : The first peak should mark the highest point of the current trend. As such, the first peak is fairly normal and the uptrend is not in jeopardy (or in question) at this time.
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18/2/2014 Double Top Reversal - ChartSchool - StockCharts.com 2/4 3. Trough : After the first peak, a decline takes place that typically ranges from 10 to 20%.
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