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

How to Identify & 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 commodity price reversal in the commodities trading market. Once a double top chart pattern is confirmed then the commodities trading market will be considered to be bearish, therefore a double top is bearish.

A double bottoms 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 commodity price reversal in the commodities trading market. Once a double bottom chart pattern is confirmed then the commodities market will be considered to be bullish, therefore a double bottoms is bullish.

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

Double Top Chart Pattern

Double tops commodities pattern is a reversal chart pattern that is formed after an extended upward commodities trend. As its name implies, this double top chart pattern formation is made up of 2 consecutive peaks that are roughly equal, with a moderate trough between.

This double tops pattern formation is considered complete once commodity price makes second peak & then penetrates the lowest point between the highs, called the neckline. The sell signal from this double top pattern formation occurs when the commodities trading market breaks below neck-line.

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

Summary:

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

Double Top Chart Pattern - How Can I Differentiate a Double Bottom from a Double Top?

Double Bottom Trading Pattern

Double bottom commodities pattern is a reversal trading pattern that is formed after an extended downward commodities trend. Double bottom commodities chart pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak between.

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

In Commodity Trading, this double bottom pattern formation is an early warning trading signal that the bearish Commodity Trading trend is about to reverse. It's only considered complete/confirmed once the neckline is broken. In this double bottoms chart pattern formation the neck line is the resistance level for the commodity price. Once this resistance is broken the commodities trading market will move up.

Summary:

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

How Can I Differentiate a Double Bottoms from a Double Tops?