How to Trade the Double Tops Stock Indices Chart Pattern
To interpret the double tops stock indices chart patterns a trader needs to first learn about the technical analysis of double tops stock indices chart patterns explained below.
Double Top Stock Indices Chart Pattern
Double tops stock indices pattern is a reversal stock indices pattern which forms after an extended upward indices trend.
As its name implies, this double tops stock indices chart pattern formation is made up of two consecutive peaks on the stock indices chart that are roughly equal, with a moderate trough in between the 2 peaks.
Double tops stock indices pattern formation is considered complete once stock indices price makes the second peak and then penetrates the lowest point between the highs, called the neckline.
The sell stock indices signal from this double top stock indices pattern formation occurs when the stock indices market breaks-out below the neck line.
In Indices, this double tops stock indices chart pattern is used as a early warning signal that a bullish Indices trend is about to reverse.
However, double tops stock indices pattern is only confirmed once the neck line is broken & the stock indices market moves below the neck line.
Neck Line is just another name for last support level formed on Indices chart.
Summary:
- Double tops stock indices pattern forms after an extended move upward - upward indices trend
- This double tops stock indices chart pattern signal indicates that there will be a reversal in stock indices trading market trend
- We sell when stock indices price breaks-out below neck-line: as described on the stock indices trading examples explained below.
Analysis of Double Top Pattern?
Double tops stock indices chart pattern look like an M Shape pattern, the best reversal stock indices signal from the double tops stock indices pattern is where the second top is lower than the first top as illustrated below:
This means that the reversal stock indices signal can be confirmed by drawing a downward indices trend line as shown below. If a trader opens a sell indices trade using this double tops reversal stock indices signal the stop loss will be placed just above this downwards trend line.
How to Interpret Double Tops Chart Pattern in Indices Trading
