Double tops and double bottoms - usage of the pattern

So, school is now back in session! What did I tell you? That we are going to talk about trading pattern in the carts, right?

Well! I am sticking by my words. Plus, this topic is very interesting, Where and when else are you going to find out that the chart can have two heads, two bottoms and a neckline? Some creature is painted, I gotta tell you.

Well, let’s see, what kind of creature we have here.

Let’s look at the one with a double top first.
Look at the picture here. We can see that in the first picture the price went up, but retreated just a little bit. The second surge was unable to reach the same heights. That’s your cue to go out. In case the second peak is not nearly as high, it means that the trend is going down and that it is going to slip pretty soon.

And we see the confirmation for that theory right away. Imagine what you can do with this information. Seeing a downtrend when the asset is up!

It is also likely that the trend is going to go lower than the neckline. It happens on the majority of cases, so watch out.

So, what are you going to do with all that money you are going to win with that? I am thinking Hawaii!

The next one is the double bottom, right?

Well, being as cool as you are you have probably already guessed that it is pretty similar to the double top, right? Well. Of course!


As you can see from this example, double bottom is just a reversed double top – hence, when the price reached a low point it can retreat a little bit and reach a low level once again. And we can see the beginning of the new trend in case the second low is not as low as the first one. BUY, BUY, BUY – of the charts could scream that is what we would hear in the situation like that.

So, what are you going to do with all that money you are going to win with that? I am thinking Hawaii!

Screaming chart would be pretty cool though.

Well, we are getting of the topic. Although we are pretty close to the end here. This is pretty much it. Double tops and bottoms explained. Easy, but can be so good while trading.

Cool tools to see the reverse trend, aren’t they?