Technicals Stability Returns
| Double Top | Double Bottom | Triple Top | Triple Bottom |
| Triangle | Head and Shoulder | Flag and Penant | Channel |
| Cup And Handle | Support By Daily Trendline |
Double top formation generally happens when knowledgeable investor sense value in stock and start accumulating thus resulting in slow and steady rise in price with gradual jump in price. Seeing the trend many more people jump in to make quick bucks. This leads to higher jump in price.
Once this is known to lot of uninformed people, they jump in and moves the price to a very high level (Top 1). But this price is unsustainable and smart investors starts booking profit resulting in fall in price to a level of midpoint.
To lot of uninformed people who missed the boat during first rally, jump in considering it 'buy on dips' opportunity and raise the price to previous high but this time Volume is less. As the higher point is unsustainable, the price falls to neckline where it may get some support. Once the neckline is broken with good volume a typical trend reversal starts to reach a fair value but the downward momentum can take it to below fair price range and thereby making a classic double top pattern.
Gap between the two tops should be at-least 5-10 trading period. In case of short term traders it can be as low as few mins and few months for long term traders. For traders who trade based on Daily closing price may want to have at-least 5-10 trading session between two tops.
In TopStockResearch.com,we try to identify double top pattern based on at-least three different period with gap varying from 5 days to a month. If the gaps are too close then it may indicate a short term resistance in longer term uptrend move.
Double top pattern is a bearish reversal pattern. What it means is, the relevance is high only when the stock is in Uptrend Basics and has no or little meaning when the stock is in consolidation zone. Traders are strongly advised not to get confused with consolidation zone.
It is one of the most commonly formed pattern and easy to identify. Its reliability is as good as 70-85% when volume is taken in consideration.
We at top stock research try to screen stock movement to find possible candidates for double top formation. We deliberately identify these stocks slightly before there formation to give heads up to potential traders and not after their formation thereby limiting the scope of returns for them. Please note that not all screened stocks actually form double top. All we want our investors to keep these stocks in their radar. With our site please also note that we do mention, price and volume of the stock at both the tops and at the midpoint.
The high end report of Double Top Chart PatternDouble Bottom Chart Pattern
Reports based on Double Top/Bottom patterns for short, medium and long term can be found at:
Double Top Report Double Bottom Report
As you have now learn better about the double top pattern, with this double top stock screener, we hope you will be able to take advantage of it in much better way.
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