Related Tutorial On Technical Analysis

Double TopDouble BottomTriple TopTriple Bottom
TriangleHead and ShoulderFlag and PenantChannel
Cup And HandleSupport By Daily Trendline  

Double Top, a bearish reversal chart pattern explained

Double Bottom

What is Double Top Pattern ?

Double top is a trend reversal chart pattern formed after good bullish price move (a continuous price move for a good duration) where the upward price movement looses its steam (first top) and it retraces a bit (to neck line or mid point). Then again it moves in direction of original trend and reaches the first top level there by forming second top. It again cannot move above first top and start moving to neckline. Once the neck line is broken its fall in price is steep.

Understanding Double top in details
Double top is formed when the stock moves up for many days and the movement is steep towards the end. And then it falls from there by about 10-15 %. After this it again tries to move up and reaches level of previous high but cannot cross its previous high. After this it again starts falling to a level of neckline. Once it retraces below neckline a downtrend starts.

A image representing Double Top Chart Pattern formation

Please note that in actual practice, the two top may not be exactly at same level. Generally, second top is a slightly lower level but 1-2 % higher then first level is also acceptable. A significant higher second top may be dealt with lot of suspicion as it may indicate continuation of uptrend.

Volume in double Top has a lot of significance as it can help to confirm formation of the pattern. Volume during first top should generally be much higher than volume during second top formation and volume during midpoint formation should be much lower than volume during neckline break out. Please avoid aggressive positioning when volume is not supporting the move. For aggressive traders a strict stop loss is recommended.

It is very fairly common to see a pullback near to neck line after formation of the pattern. It should generally be seen as a healthy thing as it gives better confirmation of neckline as resistance. In some case the pull back may happen few times. If this happens too many times then it may not be typical double top pattern. In case of pullback, it is recommended to keep a stop loss of about 3% above neck line.

Related Technical Stock Screener

Double TopDouble Top WeeklyDouble BottomDouble Bottom Weekly
Double TopDouble Top WeeklyDouble BottomDouble Bottom Weekly

Next  




Total Comments 7

User Comments
Posted by jmbmhs
Posted on: 04-Nov-2014
Hi admin,
It will be great if you provide some tutorial on the elwave theory with a clear picture explaining the waves both up and downtrends. Please exemplify with some real stock movement in NSE. Thanks in advance.

Posted by pattathils
Posted on: 11-Aug-2014
Please provide the best Charts for NSE scrips with Tech analysys, draw fascility, candle stick type etc. It will be great
 hello

Posted by balaram
Posted on: 20-Apr-2014
For chart analysis which software is better.plz tell me. Balaram. ASSAM

Posted by Guest
Posted on: 07-Apr-2014
your site is excellent i follow thi every day but if the price of the neckline is indicated in terms of inr it will be of beneficial to the readers thankyou sir

Posted by Admin
Posted on: 01-Apr-2014
Dear Manoj,
we are yet to add Head & shoulder chart pattern screening. On double top/bottom, we do have screening and tutorial. Suggest you to read them and watch stocks forming those pattern from our reports. Do it for a month , then you should be able to understand it better and be ready for trading.
 Thanks
Site Admin

Posted by MAHAVEERTELECOM
Posted on: 27-Mar-2014
Dear sir
HOW TO SCREENING STOCK CHART PATTERN AS LIKE Head & ShouldER DOUBLE BOTTOM ETC
Sir i need uar office address and tel no
thanks
my mail id mahaveertelecom@rediffmail.com
 MANOJ CHANODIYA

Posted by umeshkrishnappa
Posted on: 20-Oct-2013
what is dubbel dep 0r up


(All analysis is based on End of Trade day's Value. Expected time of update is between 5 to 5.30 PM exchange time Zone)

All Rights Reserved By Mintnovate Market Research Pvt Ltd.