Structure of the Double Top Pattern

Structure of the Double Top Pattern

The Double Top consists of three main components:
1. First Top
- Price rises strongly and forms the first peak.
- Then price pulls back → creating the middle low (neckline).

2. Second Top
- Price rallies again but fails to break above the first top.
- This indicates weakening bullish pressure.

3. Neckline Breakout
- When price breaks below the neckline, the pattern is confirmed.
- This is the safest SELL entry.

Meaning of the Double Top Pattern
- Buying pressure weakens after the second top is formed.
- Sellers begin to dominate.
- Once the neckline is broken → a new downtrend begins.
- It is considered a strong and reliable reversal pattern when it forms after a clear uptrend.

Conditions for a Valid & High-Quality Double Top
✔️ The prior trend must be strongly bullish
✔️ Both tops should be approximately equal in height
✔️ Volume is usually higher on the first top and lower on the second
✔️ A strong neckline break with high volume → solid confirmation

How to Trade the Double Top Pattern
1. SELL Entry
Enter when price breaks the neckline and retests it.
✔️ The safest entry: SELL on the neckline retest → higher probability.

2. Stop Loss Placement
- Place SL slightly above the second top (or the first top).
- SL should be placed outside the structure to avoid false breakouts.

3. Take Profit (TP)
- How to estimate the target:
- Measure the distance from the top to the neckline, then project it downward.

Tips to Avoid Getting Trapped by a Double Top
1. Do NOT SELL just because price forms the second top → not confirmed yet
2. Only SELL when the neckline is clearly broken
3. Check volume or candle strength to increase accuracy
4. Combine with RSI, FVG, Trendline, Liquidity concepts for higher probability

Don’t forget to like and share your thoughts in the comments! ❤️❤️❤️