The Double Top is a bearish pattern that consists of two consecutive peaks with a reasonable valley between those. The peaks take place almost at the same level, depicting the area where supply is getting larger than the demand. The pattern triggers when the lowest level of the pattern, the low of the valley is broken on the downside. Depending on the width of the peaks, the many variations of this pattern are called Adam & Eve Double Top, Adam & Adam Double Top, Eve & Eve Double Top etc. The inverted version of this pattern that appears at the end of a bear market is called a Double Bottom.
Most Used Trends of Double Pattern
Advantages & Limitations of Double Pattern
The performance of this pattern is really commendable but one must not fall in the trap of intraday trigger. If one waits for a closing instead of just an intraday break below the neckline of the pattern, the performance improves a lot. Unless the neckline is broken, the pattern is not valid but a lot of traders lose money trying to predict the impending fall. The volume pattern is again important as the less volume on the right peak, compared to the left peak increases the probability of success.