What is a Double Top Pattern?

What is a Double Top?

A double top is a bearish reversal pattern where price rallies to the same resistance twice but fails to break through. The inability to set a new high hints that buyers are exhausted.

Spotting a Double Top

• Two peaks: Highs occur at similar levels with a pullback in between.
• Neckline support: The interim low creates a horizontal level that becomes the trigger.
• Trend context: The pattern carries more weight after an extended uptrend.

Execution Tips

• Target the height of the pattern projected below the neckline for a measured move.
• Use lower timeframes to refine entries on retests of the neckline.
• Track momentum divergence with indicators like RSI to validate the setup.
• Trail stops as price makes lower highs to lock in gains.

Deep Dive

Most edges come from applying clear rules consistently. Expand your analysis beyond a single signal: add context from higher timeframes, recent volatility, session behavior, and catalysts. Define invalidation so a trade becomes obviously wrong fast, keeping losses small while letting winners compound.

Trader Checklist

• Higher‑timeframe bias aligns with the setup.
• Clear level or zone for entry with confluence.
• Pre‑defined stop beyond structure; 2–3R target.
• Session/liquidity supports follow‑through.
• No imminent high‑impact news unless planned.

Strategy Ideas

• Combine structure with momentum confirmation (break/close/acceptance).
• Use partials: scale out at first target; trail remainder.
• Journal results by session and pair to refine timing.

Risks and Limitations

• Thin liquidity widens spreads and distorts signals.
• False breaks around obvious levels—wait for acceptance.
• Overfitting indicators; keep the process simple and robust.

Example

Map bias on the daily chart, mark a zone, and wait on 1H for a close back above with rising participation. Enter on the retest; stop beyond the invalidation wick; target prior swing with room for extension. Record the outcome and context to iterate.