Double top – This pattern is rarely seen in the market. But whenever this pattern is performed in the market. Then it will be shown a significant movement downwards. There are some conditions inside it. We have to follow them if we do not follow them. Then we may have to suffer heavy losses.
Guys, this is a highly bearish technical reversal pattern. This is formed by touching twice on the high of a stock, currency, or any other assets. Here in the double top, the assets feel they’re high twice and start to come back down. This comes back downside for tach it’s last high.
One thing you should know is that every pattern has its importance. But this pattern has some unique power names sharply reverse the market.
Formation of Double Top
In the market, the double top looks like a big M. The double top pattern is the chart pattern that helps with technical analysis in the market. Two consecutive tops form the double full pattern. Both tops include a time-wise gap.
The double top suspends the bullish trend of the market. The price forms two highs, and both are time-wise away but price-wise very close in other mean the both high are almost the same each other, but the time gap is too far from each other increased.
On these patterns, many traders are trapped to take trades because the market is not taking a break sometimes. If you want to grab a lot of profit from this pattern, then you should learn about technical analysis of the market. After some information on technical analysis, you can easily catch it in the market.
The trader should make a foundation before jumping into trading. If your foundation is fragile, you may sustain it for a long time in the market.
How To Trade Double Top-
Now Let’s talk, friends. How can we trade on this pattern? First, we must see where the double top has performed if it has performed at the top of the market. Then We will look at the opportunity for a short sale. There Are Many conditions for trading the double top.
- It Is performed at the top of the market.
- It needs a clear-up trend.
- No last swing high should create in the market before this pattern is formed.
- It should look like an m pattern.
Before the trade this pattern, we must follow the four conditions given above. So let’s go. It is time to trade this pattern with technical analysis. According to technical analysis. First, all the high of the double design should be the same or with little difference.
After the joy of the double top, we need its shape like an m pattern. Then we also need the consolidation of the neckline. After filling all conditions by the market, it is an excellent time to sell below the neckline.
How To set stop loss Or Target –
After taking the trade, the tern shows how we can set our stop loss or target. Many traders do business with a 1:2 risk-reward ratio. But here, the truth is different. A trader should not trade according to his risk-reward ratio.
He should change according to the market. He should see where the market built its last swing high. Accordingly, he should place his stop-loss. We should put our stop-loss immediately after entry.
We have to place our stop loss at the high with a little buffering of the double top. As much as the difference between our entry and stop-loss, at least we need one-half target after the entry. We should wait for the target and stop loss. And in the end, never give up.