Double tops, triangles and head and shoulders
Double tops and double bottoms
Lesson 1 of 4 · about 8 minutes
4 questions, each checked the moment you answer it.
7 steps · about 8 minutes
The interactive lesson walks these ideas one screen at a time and checks your answers as you go. The text below covers the same ground for reading.
A double top is two highs at about the same price
Price rises to a high, pulls back, then rises to about the same high again. A high is the highest price the rise reached, the top of the candle wick. The low between the two highs is the neckline, and the shape exists once the second high has formed and turned down.
The second high has to turn down before the shape exists
Both drawings below start the same way: a rise to a high, a fall to the neckline, then a second rise. In the first, the second rise stops near the same price and turns down, so there are two highs to compare and the shape is there. In the second, the rise is still going, so there is no second high yet and nothing to compare. That one feature is what the next few questions turn on.
A double bottom is the same test upside down
Two lows at about the same price, a real bounce between them, and the neckline now sits above, at the top of that bounce. Every part of the test carries over. This drawing is the double top reflected, so its numbers are the same ones: the two lows are 5 pips apart, the bounce from the neckline at 1.10878 down to 1.09945 is 93 pips, and the tolerance is a quarter of that, about 23 pips. The shape only exists once the second low has formed. The counts in "What happens after a double top" were measured on double tops, so they describe that shape and no other.