Double top

The double top pattern is the mirror image of the double bottom pattern. The former is bearish, the latter bullish.

On your typical chart, the double top looks like the letter "M". The first leg is a sustained uptrend, the second leg a pullback, the third an attempt by the bulls to pass the resistance line created by the first top (in short, an uptrend) and the fourth a push downwards by the bears (in other words, a downtrend).

A double top is considered complete when the fourth leg passes by (on its way down) the support line defined by the middle low. In this blog, double tops will be shown in their incomplete states, that is, without the fourth leg.

Why? You may ask. Kinda like the idea of detecting the formation of a pattern as early as possible. If you prefer to wait for pattern completion, well, all you have to do is keep an eye on the equity of interest and get on it later. Getting in early maximizes potential profit but it is of course riskier, as always.

It should be noted that the double top does not occur as often as the double bottom, at least from what I can tell. So you probably will see a lot more double bottoms on this blog than double tops.