Double Top and Double Bottom

A double top is a bearish reversal pattern where price rises to a high, pulls back, rallies to roughly the same high again and fails, forming an "M" shape. A double bottom is the bullish mirror: two lows at about the same level forming a "W". The pattern is confirmed when price breaks the level between the two peaks or troughs, called the neckline or confirmation line.

Anatomy#

The two highs or lows do not have to be identical; within a few percent is common, depending on volatility.

Why it works#

At a double top, buyers push to a high, sellers push back, and buyers try again but cannot exceed the previous high. That second failure shows supply at the level is strong. When price then falls below the pullback low, structure shifts to lower highs and lower lows. Double bottoms show demand defending a level twice.

The confirmation matters#

Many traders call a double top as soon as the second high forms. But until the neckline breaks, it might be a range or a pause before a breakout to new highs. Waiting for the neckline break filters many false patterns.

Trading the pattern#

1. Prior trend: make sure there is a trend to reverse.
2. Second test: note whether the second high or low shows rejection, such as a long wick or lower volume on the approach.
3. Neckline break: enter on a close beyond it, or on a retest of the broken neckline. See Role Reversal and Retests.
4. Stop: beyond the second extreme for safety, or beyond the retest for a tighter stop.
5. Target: the pattern height projected from the neckline, adjusted for nearby support or resistance.

Variations#

• Adam and Eve: one sharp, V shaped extreme and one rounded extreme, described by Thomas Bulkowski.
• Uneven tops: the second high slightly above the first, sometimes after a brief liquidity sweep, which can make the reversal more powerful. See Liquidity Sweeps and Stop Hunts.
• Triple tops and bottoms: three tests instead of two. See Triple Top and Triple Bottom.

Common mistakes#

• Shorting the second high before any confirmation, in a strong uptrend.
• Ignoring time: two highs a few candles apart on a low timeframe mean far less than two highs weeks apart on a daily chart.
• Forgetting that equal highs attract buy stops, so price often pokes above them before reversing, or breaks out for real.

Frequently asked questions#

What is a double top pattern?#

A bearish reversal pattern where price tests a high twice and fails, then breaks below the low between the peaks.

How long should a double top take to form?#

There is no fixed rule, but significant patterns on daily charts often take weeks between the two peaks.

What happens if a double top breaks upward instead?#

The pattern fails, and the break above the double high is often a bullish breakout, sometimes a strong one as short sellers cover.

Next, learn the three test version: Triple Top and Triple Bottom.