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.
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.
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.
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.
1H, 4H, Daily
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.
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.
Measured move projections use the length of a prior price swing to forecast the target of the next swing in the same direction. The technique assumes market symmetry — that the second leg of a move will approximate the distance of the first leg. Measured moves apply to impulse waves, corrective patterns, and chart pattern breakouts, providing objective price targets that remove subjectivity from exit planning.
The head and shoulders is one of the most reliable reversal patterns in technical analysis. It consists of three peaks — a higher central peak (the head) flanked by two lower peaks (the shoulders) — connected by a neckline drawn across the reaction lows. A break below the neckline confirms the reversal, with the measured target equal to the distance from the head to the neckline projected downward from the breakout point.
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.