What is Double Tops Chart Patterns in Forex?

How Do You Identify a Double Tops Trading Pattern in Forex ?

The Best Trading Patterns Tutorial for Beginner Traders - How to Identify and Trade Double Tops Chart Pattern

Chart Patterns for Day Trading - Trading Forex Patterns Cheat Sheet

This Double Tops trading patterns charts guide explains how to identify patterns - identifying patterns is the first step when it comes to learning how to trade with Double Tops chart patterns in Forex.

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

Double Tops Chart Pattern

Double tops pattern is a reversal pattern which forms after an extended uptrend. 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 top pattern formation is considered complete once price makes the second peak & then penetrates the lowest point between the highs, called the neck-line. The sell signal from this double top pattern formation occurs when market breaks-out below the neck line.

In Forex, this double top pattern formation is used as a 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 market moves below the neckline. Neckline is just another name for last support level formed on Forex chart.

Summary:

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

Double Top Pattern - What is Double Tops Chart Patterns in Forex?

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

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