Is a Double Tops Chart Pattern Bullish or Bearish?

A double top chart pattern has an M shape and it occurs at a market top hence its name double top chart pattern and it signals a bearish price reversal in the market.

Once a double tops chart setup is confirmed then the market will be considered as bearish, therefore a double tops is bearish.

Double Top Setup

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

This double top chart setup formation is considered complete once price makes the second peak and then penetrates the lowest point between the highs, called the neck-line. The sell signal from the double tops pattern setup formation forms when the market breaks-out below neckline.

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

Summary:

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

Double Top Pattern - Is a Double Top Pattern Bullish or Bearish?