Reversal patterns
Double top
Usually bearish
Two roughly equal highs separated by a pullback, with the low between them forming the confirmation level.
What a double top tells you
The second failure at the same price is the point. Something is sitting at that level — a large seller, a prior breakdown, a round number — and the market has now failed there twice. It is confirmed only on a close below the intervening low.
Why it forms
The first rejection creates memory. The second brings out both fresh sellers and buyers taking the exit they wished they had taken the first time.
How traders enter it
Traders wait for the break of the middle low, then project the height of the pattern downward for a first objective.
How it fails
A slightly higher second top that runs stops before reversing looks identical in hindsight but stops out anyone who shorted the exact level. The pattern also fails when the middle low breaks on thin volume and immediately recovers.
That last section is the one worth rereading. A pattern is only useful because it comes with a level that proves you wrong — without one you have a shape and a hope.
People also ask
Is a double top bullish or bearish?
A double top is usually read as bearish, but only once it confirms. Before the confirming break it is a shape, and shapes fail. Context decides more than the label does.
How do you trade a double top?
Traders wait for the break of the middle low, then project the height of the pattern downward for a first objective.
When does a double top fail?
A slightly higher second top that runs stops before reversing looks identical in hindsight but stops out anyone who shorted the exact level. The pattern also fails when the middle low breaks on thin volume and immediately recovers.
Can ChartLens spot a double top for me?
Yes. Photograph or screenshot any chart and ChartLens names the pattern if it is clearly formed, with a confidence level and whether it is forming, confirmed or failed — and says nothing if it is not there.
Last updated .