Double top

Family VI · Charts & indicators

Not to be confused with top of market order, double bottom.

Double top is a reversal chart pattern that appears after a sustained uptrend. It consists of two distinct peaks at approximately the same price level, with a trough between them, and is confirmed when price closes below the low of that trough. The pattern is widely watched because it suggests that buying pressure has failed twice at the same resistance.

Structure and confirmation

A double top requires an existing uptrend, a first peak, a pullback that forms a trough, a second peak that reaches roughly the same level as the first, and a decline that breaks below the trough low. The two peaks need not be exactly equal; many chartists allow a tolerance of a few percent, though the acceptable range varies by market and timeframe. The pattern is not considered confirmed until price closes below the trough low, which is often called the neckline.

Volume patterns are sometimes used as a secondary check: the second peak may occur on lower volume than the first, but this is not a required condition and can vary widely across instruments.

Worked example

Suppose a stock rallies from 50 to 80, pulls back to 70, rallies again to 79, and then falls. The trough low is 70. A close below 70 confirms the double top. The measured move target is the height of the pattern subtracted from the neckline: 80 − 70 = 10, so the target is 70 − 10 = 60.

DOUBLE TOP MEASURED MOVE

First peak80—

Trough low70—

Pattern height80 − 7010

Measured move target70 − 1060

Practical notes

Double tops can fail: price may break below the trough only to reverse higher, or the second peak may exceed the first and continue the uptrend. The pattern is more reliable when the trough is a clear swing low and when the breakout below it is accompanied by increased volume, though volume behaviour is not uniform. Traders often place a stop-loss above the second peak or above the trough, depending on their risk tolerance.

Often confused with

top of market order: A top-of-market order is an instruction to buy or sell at the best available price immediately, not a chart pattern; the visible sign is that it appears in an order ticket, not on a price chart.
double bottom: A double bottom is the mirror image of a double top: it forms after a downtrend with two troughs at similar levels and is confirmed by a close above the intervening peak; the visible sign is that it points to a reversal upward, not downward.

Double top

Structure and confirmation

Worked example

Practical notes

Often confused with

See also