InvestorQ : What are double tops and double bottoms and how are they interpreted in technical analysis?
prachi Patwardhan made post

What are double tops and double bottoms and how are they interpreted in technical analysis?

Answer
user profile image
1 year ago


Double tops and double bottoms are another important formation from a trader’s perspective. A “double top” or “double bottom” forms when a stock hits its existing support or resistance level two times without breaking through. After the second peak or valley, watch out to see if the chart breaks the key support or resistance level. If it does, you will likely see it continue all the way up or down, forming a trend reversal. Ideally, the complete double top or double bottom formation has two peaks and two valleys and after than the trend is visible for interpretation. These are indicative when a strong support or resistance is broker and a new trend begins in the market. You can position yourself at the early stages of such a break out so that you can make the most of the price movement.