XAUUSD Trading Differentiate a Double Bottom Chart Pattern from a Double Top Chart Pattern

How to Differentiate a Double Bottom Chart Pattern from a Double Top Chart Pattern

Trading Gold Identify and Trade Double Bottoms Chart Pattern and Double Tops Chart Pattern

A double top trading pattern has an M shape and it occurs at a xauusd market top hence its name double top chart pattern and it signals a bearish gold 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 top is bearish.

A double bottom chart pattern has a W shape and it occurs at a xauusd market bottom hence its name double bottom chart pattern and it signals a bullish gold 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 bottom is bullish.

To identify double top and double bottoms patterns the examples below explain the 2 gold trading patterns:

Double Top Trading Pattern

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

This double top pattern formation is considered complete once gold price makes the second peak and then penetrates lowest point between the highs, called the neck line. 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 pattern is only completed once the neck-line is broken and the xauusd market moves below the neckline. Neckline is just another name for the last support level formed on XAUUSD chart.

Summary:

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

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

Double Bottom Trading Pattern

Double bottom xauusd chart pattern is a reversal xauusd pattern which forms after an extended downward xauusd trend. Double bottom gold trading 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 gold price makes the second low and then penetrates the highest point between the lows, called the neck line. 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 bottoms 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 bottom pattern formation the neck-line is the resistance level for 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: see below for the explanation.

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

XAUUSD Trading Differentiate a Double Bottom Chart Pattern from a Double Top Chart Pattern