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

How to Identify & Trade Double Bottoms Pattern and Double Top Chart Pattern

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

To identify double tops & double bottom patterns the example below explain the two gold trading patterns:

Double Top Chart Pattern

Double tops xauusd pattern is a reversal chart pattern that is formed after an extended upward gold 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 chart pattern formation is considered complete once gold trading price makes the 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 xauusd market breaks-out below neckline.

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

Summary:

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

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

Double Bottom Chart Pattern

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

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

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

Summary:

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

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