Reversal Bitcoin Chart Setups - Double Tops and Double Bottoms Bitcoin Patterns

Reversal chart patterns are formed after the market price has had an extended move up or down and the market price reaches a strong resistance area or support zone respectively.

When price reaches such a point it starts to form a chart pattern - reversal chart pattern. Since these chart setups are frequently formed it is easy to spot them once you learn how to spot them and start using them.

There are four types of reversal chart patterns:

Double Top
Double Bottom
Head & shoulders
Reverse Head & shoulders

This tutorial will only cover double top and double bottom chart patterns, the other 2 will be covered in the next tutorial: head and shoulders & reverse head and shoulders pattern.

Double Top - Reversal Pattern

This double tops chart pattern is a reversal trade pattern setup that is formed after an extended up-wards market trend. As its name implies, this formation is made up of 2 consecutive peaks which are roughly equal, with a moderate trough in between.

This double tops formation is considered complete once the price makes second peak and then penetrates lowest point between highs, called the neckline. The technical sell signal from this reversal pattern formation occurs when the market breaks-out below the neckline.

In BTC/USD Crypto trading, this formation is used as an early warning signal that a bullish Bitcoin price trend is about to turn and reverse. However, it is only confirmed once the neck line is broken and the market crosses below neckline. Neck-line is just another term for the last support level formed on the Bitcoin price chart.

Summary:Forms after an extended price move upwards

This formation indicates that there will be a reversal in market price direction

We sell when price breaks-out below the neckline: see below for an explanation.

Reversal Chart Setups - Double Tops Bitcoin Chart Setup & Double Bottoms Bitcoin Pattern

Double Top Reversal Pattern - BTCUSD CryptoCurrency Trading

Example 2: Double Tops Reversal Pattern

Double Tops Bitcoin Reversal Chart Setup & Double Bottoms Bitcoin Reversal Pattern

Double Top Reversal Pattern - Bitcoin Trading

The double tops reversal chart pattern look like an M-Shape, the best reversal signal is where the second top is lower than the first one as shown below, this means that the reversal setup can be confirmed by drawing a downwards trendline like is illustrated below. If one opens a sell trade the stop loss will be placed just above this downward trend line.

Reversal Chart Setups in Crypto Trading

M Shaped Double Tops Reversal Pattern - Downwards Trend Line

Double Bottom - Reversal Pattern

Double bottom is a reversal chart pattern that forms after an extended downward trend. It's made up of 2 consecutive troughs which are roughly equal, with a moderate peak in between.

This double bottom reversal chart pattern is considered complete once the price makes second low & then penetrates highest point between lows, called the neckline. The buy indication from this bottoming out signal occurs when the market breaks out the neckline to the upside.

In BTC/USD Crypto trading, this formation is a early warning signal that the bearish Bitcoin price trend is about to turn and reverse. It is only considered complete/confirmed once the neckline is broken to the upside. In this formation the neck-line is the resistance level for the price. Once this resistance level is broken the market will move upward.

Summary:Forms after an extended move downwards

This formation indicates that there will be a reversal in market trend

We buy when the price breaks above the neck-line: see below for an explanation.

Double Tops Bitcoin Chart Setup & Double Bottoms Bitcoin Chart Setups - Bitcoin Reversal Chart Setups in BTCUSD Trading

Double Bottom Reversal Pattern - Crypto Trading

Example 2: Double Bottoms Reversal Pattern - Bitcoin Trading

Reversal Bitcoin Chart Setups - Double Top Bitcoin Chart Setup and Double Bottom Bitcoin Pattern

Double Bottom Reversal Pattern - Bitcoin Trading

The double bottom chart pattern looks like a W-Shape, the best reversal signal is where the second bottom is higher than the first one like is shown below, this means that the reversal setup can be confirmed by drawing an up trendline as shown below. If a btc/usd trader opens a buy position the stop loss will be placed just below this upward trend-line.

Bitcoin Reversal Patterns - Bitcoin Double Tops Setup and Bitcoin Double Bottom Pattern

W Shaped Double Bottoms Reversal Pattern - Upwards Trend-Line

Study More Guides & Topics:

Trade Bitcoin Trading

Reversal Bitcoin Chart Setups - Double Tops and Double Bottoms Bitcoin Patterns

Double Top - Reversal Pattern

Double Bottom - Reversal Pattern