FX:AUDUSD   Australian Dollar / U.S. Dollar
I've screened some of the top FX chartist and many are calling AUDUSD a double top pattern. This is incorrect.

As you can see the retracement from the bottom @ 1.015 established in October (where the prior trend starts) the first peak in December was 1.585. The next stage is the first trough. The AUDUSD first trough hit 1.03434.

The problem exist in the first trough. The first peak-to-trough corrected by more than 50%, far more than the 10 to 20% which is normal for a double top . So therefore AUDUSD is not a double top chart pattern.

With that said, because of the overshoot with the first trough AUDUSD hit a new high. With a new high I believe AUDUSD will put in a higher low and this bullish trend will continue thereafter the next low is in place. I have the low reaching the .618 fib retracement at 1.0418.

Textbook Double Top Reversal
The Double Top Reversal is a bearish reversal pattern typically found on bar charts, line charts and candlestick charts. As its name implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between. Note that a Double Top Reversal on a bar or line chart is completely different from Double Top Breakout on a P&F chart. Namely, Double Top Breakouts on P&F charts are bullish patterns that mark an upside resistance breakout.

1.Prior Trend: With any reversal pattern, there must be an existing trend to reverse. In the case of the Double Top Reversal, a significant uptrend of several months should be in place.
2. First Peak: The first peak should mark the highest point of the current trend. As such, the first peak is fairly normal and the uptrend is not in jeopardy (or in question) at this time.
3. Trough: After the first peak, a decline takes place that typically ranges from 10 to 20%. Volume on the decline from the first peak is usually inconsequential. The lows are sometimes rounded or drawn out a bit, which can be a sign of tepid demand.
4. Second Peak: The advance off the lows usually occurs with low volume and meets resistance from the previous high. Resistance from the previous high should be expected. Even after meeting resistance, only the possibility of a Double Top Reversal exists. The pattern still needs to be confirmed. The time period between peaks can vary from a few weeks to many months, with the norm being 1-3 months. While exact peaks are preferable, there is some leeway. Usually a peak within 3% of the previous high is adequate.
5. Decline from Peak: The subsequent decline from the second peak should witness an expansion in volume and/or an accelerated descent, perhaps marked with a gap or two. Such a decline shows that the forces of demand are weaker than supply and a support test is imminent.
6. Support Break: Even after trading down to support, the Double Top Reversal and trend reversal are still not complete. Breaking support from the lowest point between the peaks completes the Double Top Reversal. This too should occur with an increase in volume and/or an accelerated descent.
7.Support Turned Resistance: Broken support becomes potential resistance and there is sometimes a test of this newfound resistance level with a reaction rally. Such a test can offer a second chance to exit a position or initiate a short.
8.Price Target: The distance from support break to peak can be subtracted from the support break for a price target. This would infer that the bigger the formation is, the larger the potential decline.

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