Double tops and bottom

Double tops and bottoms are easily recognized and mostly used patterns by the traders. It takes inspiration from triple tops and bottom but here instead of 3 peaks, there are 2 peaks. If we understand triple tops and bottom, then understanding double tops and bottoms.

Both the peaks are at the same resistance level and not able to break these price levels due to selling pressure at this price.

From the above image, we can observe that volume of the second peak is less than the volume of the first peak i.e. VOLUME (SECOND PEAK)<VOLUME(FIRST PEAK), which shows that the uptrend is fading away as volume is kept on falling.

This pattern will complete when the price breaks the support level with a huge volume, again volume is very significant if the break is not followed by huge volume, it may be considered a sideways trend and the price will follow an uptrend.

Similarly, inverse double tops and bottom is the water image of the previous one.  Both the troughs are at the same support level because here buying pressure is greater than selling pressure and the price is not able to fall below this point. The second trough’s volume is less than the first trough’s volume, which indicates that the downtrend is fading as the volume is kept on decreasing. The pattern will complete when the resistance level is broken with the huge volume, thus starting a bullish market from now onwards.

Great care should be taken while using this pattern and should not be confused with sideways movements in prices which usually take place during the major trends.

Moreover, this pattern will become more significant when there is an increase in the time between the two peaks and an increase in the height of the pattern and works well on weekly and monthly charts.