How to Trade the Double Top Pattern

✅ Quick Checklist

  • 📈 Initial strong rally to a resistance zone
  • ⏸ Pullback from resistance
  • 📈 Second rally failing at the same resistance
  • 🔻 Breakdown below neckline support
  • 💸 Measured target = height of the pattern

The Double Top is a classic reversal pattern signaling potential trend change from bullish to bearish. It indicates buyers are struggling to push price higher past a key resistance level.

What is a Double Top?

A Double Top forms when price hits a similar resistance level twice and fails to break through, creating two peaks. A break below the intervening low confirms the pattern.

How to Identify a Double Top

  • Look for two peaks at similar price levels.
  • Notice volume often decreases on the second peak.
  • Watch for a break below the neckline support.
  • Target drop equals distance between peaks and neckline.

Entry and Exit Strategy

  • Entry: Short the break below the neckline.
  • Stop Loss: Above the second peak’s high.
  • Target: Height of the pattern projected down from neckline.

Common Mistakes

  • Shorting too early without neckline break.
  • Ignoring volume clues.
  • Not confirming lower highs between peaks.
  • Trying to force the pattern in weak markets.

Chart Pattern

Daily Momentum Example 1
Daily Momentum Example 2
Daily Momentum Example 3
Daily Momentum Example 4
Daily Momentum Example 5