Double top and double bottom

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Accepted Answer

A double top is two highs at about the same price with a dip between; a close below the dip's low turns it down. A double bottom is two lows with a bounce between; a close above the bounce's high turns it up. Double top (an M) Price makes a high, dips, rallies back to about the same high and fails again. The low of the dip between is the trigger: a close below it completes the top. Double bottom (a W) Price makes a low, bounces, falls back to about the same low and holds. A close above the bounce's high completes the bottom. Trading it Entry on the close through the trigger. Stop past the two highs (or lows). Target the pattern's height from the break (stops and targets). Two tests of the same price often sit right on a key level: yesterday's or last week's high or low.