A double pattern is one of the most commonly used technical structures. It can be found in the arsenal of any trader despite the level or experience. A double top makes it possible to enhance technical analysis no matter what you trade (stocks, currency pairs, or Forex).
In this article, you will learn:
- What a double top pattern is.
- Ways to identify and use it.
- How a double top works.
- The difference between a double top and a filed double top.
- Additional tips to use together with technical analysis.
What Is a Double Top Pattern?
A double top is to depict the two high points on the market that are generally associated with the bearish reversal signal. The two high points form a zone where it is possible to measure the price decrease featuring the resistance between the price highs.
In other words, we have an instrument that shows a long or medium-term trend change depending on the asset type you trade. A lagging peak makes it possible to observe a slowing momentum with the help of other oscillators like RIS as a part of the technical analysis.
The market is likely but not obligatory to break above the first peak although even for a short period. In other words, traders can witness either a temporary or short break exciting the bulls to lower the trend or even reverse. This is what makes both a double top and bottom patterns very powerful instruments to be used in various financial markets.