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

How to Identify and Trade Double Bottoms Oil Trading Chart Pattern and Double Tops Oil Trading Chart Pattern

A double tops crude oil trading chart pattern has an M shape and it occurs at a market top hence its name double top crude oil chart pattern and it signals a bearish crude oil price reversal in the crude oil market. Once a double top crude oil chart pattern is confirmed then the crude oil market will be considered to be bearish, therefore a double tops is bearish.

A double bottom crude oil trading pattern has a W shape and it occurs at a market bottom hence its name double bottom crude oil chart pattern and it signals a bullish crude oil price reversal in the crude oil market. Once a double bottom crude oil chart pattern is confirmed then the crude oil market will be considered to be bullish, therefore a double bottoms is bullish.

To identify double tops & double bottom crude oil patterns the example below explain the two oil trading chart patterns:

Double Tops Oil Trading Pattern

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

This double tops crude oil chart pattern formation is considered complete once crude oil price makes the second peak & then penetrates the lowest point between highs, called the neck line. The sell oil signal from this double tops crude oil chart pattern formation occurs when the crude oil market breaks-out below neck line.

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

Summary:

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

Double Tops Oil Trading Pattern - How Can I Differentiate a Double Bottom from a Double Tops?

Double Bottoms Oil Trading Pattern

Double bottom crude oil pattern is a reversal oil trading pattern that is formed after an extended downwards oil trend. Double bottom crude oil pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak between.

This double bottoms crude oil chart pattern formation is considered complete once crude oil price makes the second low and then penetrates the highest point between the lows, known as the neck line. The buy indication from this bottoming out signal occurs when crude oil market breaks-out the neckline to the upside.

In Oil Trading, this double bottoms crude oil chart pattern formation is an early warning trading signal that the bearish Oil Trading trend is about to reverse. It is only considered complete/completed once the neck line is broken. In this double bottoms crude oil pattern formation the neckline is the resistance level for the oil price. Once this resistance is broken the crude oil market will move up.

Summary:

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

How Can I Differentiate a Double Bottoms from a Double Top?