What's Double Tops Chart Setup Patterns in XAUUSD?

Trading Identify a Double Tops Pattern in XAUUSD

The Best Trading Setup Patterns Tutorial for New Traders - How to Identify & Trade Double Tops Chart Pattern

Gold Setup Patterns for Day Trading - Trading Setup Patterns Tutorial

This Double Tops patterns charts tutorial explains how to identify chart setups - spotting chart setups is the first step when it comes to learning how to trade with Double Tops chart setups in XAUUSD.

Double Tops price setups commonly form on charts and this chart pattern analysis guide explains how to trade & analyze charts using Double Tops chart setups.

Double Top Pattern

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

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

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

Summary:

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

Double Top Chart Pattern - What is Double Tops Chart Setup Patterns in XAUUSD?

The double top chart pattern look like an M Shape, the best reversal signal is where the second top is lower than the first one as displayed below, this means that the reversal signal can be confirmed by drawing a downwards trend-line as shown below. If a trader opens a sell signal the stop loss will be placed just above this downward trend line.

M Shaped Double Tops Chart Pattern - What is Double Tops Chart Setup Patterns in XAUUSD?