Double Top (Reversal)
The double top is a major reversal pattern that forms after an extended uptrend. As its name implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between. |
Double Top/Bottom
When price peaks after a rise, and the decline that follows leads to another rise in prices to form a second peak at or about the level of the first peak, a double peak is said to have formed. A neckline can be drawn across the base of the two peaks |
Double Top
A term used in technical analysis to describe the rise of a stock, a drop, another rise to the same level as the original rise, and finally another drop. |
Trading Double Tops and Double Bottoms
No chart pattern is more common in trading than the double bottom or double top. In fact this pattern appears so often that it alone may serve as proof positive that price action is not as wildly random as many academics claim. Price charts simply express trader sentiment and double tops and double bottoms represent a re-testing of temporary extremes. If prices were truly random, why do they pause so frequently at just those points? To traders the answer is that many participants are making their stand at those clearly demarcated levels. |
|
del.icio.us
digg
furl
Facebook
Technorati