Double Top & Double Bottom
Overview
Double tops and double bottoms are two-touch reversal patterns that form when price tests the same level twice and fails to break through. A double top signals bearish reversal after an uptrend, while a double bottom signals bullish reversal after a downtrend. The pattern is confirmed when price breaks the support or resistance level formed between the two peaks or troughs.
Key Concepts
Two peaks (double top) or troughs (double bottom) at approximately the same price level. Confirmation line: the reaction low between the peaks (top) or reaction high between the troughs (bottom). Volume typically declines on the second touch. The measured move target equals the height of the pattern projected from the breakout.
Entry Signals
Enter on a confirmed break below the reaction low (double top) or above the reaction high (double bottom) with volume expansion. Wait for a retest of the broken confirmation level for a higher-probability entry. The second peak or trough should show momentum divergence on RSI or MACD. Ensure the two touches are spaced far enough apart to represent genuine retests, not minor fluctuations.
Exit Signals
Measured-move target equals the vertical height of the pattern projected from the breakout point. Place stops above the double top or below the double bottom. Partial profits at 1:1 risk-reward with the remainder targeting the full measured move. Exit if price reverses back through the confirmation level.
Best Timeframes
1H, 4H, Daily
Pro Tips
The best double tops and bottoms occur after extended trends. The second peak or trough does not need to touch the exact same price — a close approximation is valid. Always check for bearish or bullish divergence on oscillators at the second touch for higher-conviction setups.
More Topics in This Category
Rising & Falling Wedges
Rising and falling wedges are converging trendline patterns where both support and resistance slope in the same direction. A rising wedge (both lines slope upward, converging) is typically bearish, while a falling wedge (both lines slope downward, converging) is typically bullish. Wedges differ from triangles because both trendlines slope in the same direction rather than converging symmetrically.
Cup & Handle
The cup and handle is a bullish continuation pattern resembling a teacup when viewed from the side. The cup forms as a rounded bottom with the left and right rims at approximately the same level, followed by a small downward-drifting consolidation (the handle). A breakout above the handle's resistance triggers the measured move, calculated from the bottom of the cup to the rim.
Bull & Bear Flags
Bull and bear flags are continuation patterns consisting of a sharp price move (the flagpole) followed by a brief, counter-trend consolidation channel (the flag). Bull flags slope downward after an upward pole; bear flags slope upward after a downward pole. These patterns represent a pause in strong momentum before the trend resumes, and they are among the most commonly traded continuation setups.
Diamond Patterns
Diamond patterns are relatively rare reversal formations that combine a broadening pattern followed by a symmetrical triangle, creating a diamond-shaped outline on the chart. They typically appear at market tops (diamond top) or, less commonly, at bottoms (diamond bottom). The pattern signals an exhaustion of trend momentum as volatility first expands then contracts before a decisive breakout.