What is Double Tops and Double Bottoms

Double Tops and Double Bottoms

Double tops and bottoms are one of the most well known and powerful money making techniques known by forex traders. They are a test of a previous high or low. Triple Tops and Triple Bottoms are similar but have three Peaks or Lows

A double top occurs when the price attempts to break out above a recent pivot high but fails this pattern consists of two tops of approximately equal height. Many traders wait for the confirmation when the retracement low beneath the two peaks is broken to the downside after the second peak. When a double top has been formed, the price objective is usually an equal distance down beyond the correction low (valley between the two peaks). Double tops are not as strong in a strong up trend as they are in a downtrend.

The mirror image of the double top is the double bottom – a bullish formation. Support cannot be established until there is a test of the last point of support.

Double tops (M shaped) and double bottoms (W shaped) are stronger if the equal points are a long way apart. The two peaks of a double top do not have to be exactly at the same level so allow a few pips difference. A double bottom with a slightly higher low for the second point can be a strong bullish signal. Double bottoms are not as strong in a strong downtrend as they are in an up trend. A double bottom which coincides with a pivot line can produce a fast move upwards.