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.
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.
Broadening & Expanding Patterns
Broadening patterns, also called megaphone or expanding patterns, form when price creates progressively higher highs and lower lows, diverging rather than converging. These patterns reflect increasing volatility and disagreement between buyers and sellers, often appearing during periods of uncertainty or at major market turning points. Broadening patterns are among the most challenging formations to trade because they lack the contracting structure of typical chart patterns.
Ascending & Descending Triangles
Ascending triangles form when price creates a horizontal resistance line at the top and a rising support trendline at the bottom, indicating buyers are becoming more aggressive. Descending triangles feature a horizontal support floor with a declining resistance trendline, suggesting sellers are gaining control. Both patterns are typically continuation patterns that resolve in the direction of the prevailing trend with a measured move target equal to the triangle's height.