How Can You Differentiate a Double Bottom from a Double Top?

How to Identify and Trade Double Bottom Pattern & Double Top Pattern

A double top trading pattern has an M shape and it occurs at a market top hence its name double top chart pattern and it signals a bearish cfd price reversal in the cfds trading market. Once a double top chart pattern is confirmed then the cfd market will be considered to be bearish, therefore a double tops is bearish.

A double bottom chart pattern has a W shape and it occurs at a market bottom hence its name double bottom chart pattern and it signals a bullish cfd price reversal in the cfds trading market. Once a double bottom chart pattern is confirmed then the cfd market will be considered to be bullish, therefore a double bottoms is bullish.

To identify double top & double bottom patterns the example below explain the 2 cfd trading patterns:

Double Tops Trading Pattern

Double tops cfd pattern is a reversal chart pattern that is formed after an extended upward cfds trend. As its name implies, this double top chart pattern formation is made up of two consecutive peaks which are roughly equal, with a moderate trough between.

This double tops pattern formation is considered complete once cfd price makes second peak & then penetrates lowest point between the highs, known as the neckline. The sell signal from this double top chart pattern formation occurs when the cfd market breaks-out below neckline.

In CFD, this double top pattern formation is used as a early warning trading signal that a bullish cfds trend is about to reverse. However, double top chart pattern is only completed once the neckline is broken and the cfd market moves below the neck-line. Neckline is just another name for the last support level formed on the CFD chart.

Summary:

• Double tops cfd chart pattern forms after an extended move upward
• This double top pattern formation indicates that there will be a reversal in the cfd trading market
• We sell when the price breaks out below the neck line point: see below for an explanation.

Double Top Pattern - How Can You Differentiate a Double Bottoms from a Double Tops?

Double Bottoms Trading Pattern

Double bottom cfd pattern is a reversal cfd pattern which forms after an extended downward cfds trend. Double bottoms cfd pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak between.

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

In CFD, this double bottom pattern formation is an early warning signal that the bearish cfds trend is about to reverse. It is only considered complete/completed once the neck line is broken. In this double bottoms chart pattern formation the neckline is resistance level for the cfd price. Once this resistance is broken the cfd market will move up.

Summary:

• Double bottoms cfd pattern forms after an extended move downward
• This Double bottoms cfd chart pattern formation indicates that there will be a reversal in the cfd trading market
• We buy when price breaks out above neck-line point: see below for an explanation.

Double Bottom Pattern - How Can You Differentiate a Double Bottoms from a Double Tops?