I’ve been looking at charts more lately and keep hearing about double top patterns. Not sure I’m seeing them correctly though.
What are the key things to look for? And how reliable are they for predicting price drops?
Curious to hear from those with more experience spotting these patterns.
Double tops burned me early on. Thought I spotted one in Apple, went all in short. Stock kept climbing, wiped half my account.
Learned the hard way to wait for neckline break and volume confirmation. Now I use them with other signals.
Last month caught a nice NVIDIA double top. Small position, but 30% gain felt sweet.
Double tops aren’t rocket science. Key things: two price peaks at similar levels, decreasing volume on the second peak, and a clear break below the low point between peaks. That’s your entry signal. I’ve traded these for years. They work, but don’t bet the farm on them. Use stops, manage your position size, and always have a backup plan. No pattern is 100% reliable. Remember, the market can do anything at any time. Double tops are just one tool in your toolkit. Combine them with other indicators and always keep an eye on the bigger picture.
Double top characteristics:
• Two equal peaks
• Obvious uptrend before pattern
• Volume typically decreases on second peak
• Neckline break confirms pattern
Reliability varies. Backtest to assess effectiveness.
Been trading double tops for 2 years now. Spotting them got easier with practice. Watch for equal highs and volume drop on second peak. My win rate’s about 65%.
Double tops can be tricky to spot at first. Look for two price peaks at roughly the same level after an uptrend.
The second peak usually has lower volume. Key is waiting for the price to break below the ‘neckline’ between the peaks.
They’re not foolproof though. Always use other indicators and manage your risk carefully.