Chart example is on 30 minute GbpChf (can be on any time frame) The Double Top Pattern:
The double top pattern is also a type of reversal patterns similar to the head and shoulders pattern. It is also a bearish reversal pattern, but the difference is that this pattern has two high swings that loom around the same price level.
The price level in the double top pattern forms a peak. It retraces itself back to a support group only to create a peak again just before it moves away from the ongoing trend.
In terms of graphical representation, this pattern almost has an M shape, making it relatively easy for traders to spot it on their trading charts.
One thing to take care of while dealing with both the double top and the double bottom pattern is to be entirely sure of their interpretation.
If identified on the right on time and interpreted correctly, both of these patterns can be an invaluable asset to you. However, if misinterpreted, then these or any Forex chart patterns can make irreparable your trades.
Rules:
1) Conservative traders will set up trades on breakout of neckline: on chart easy 25 pips with 12.5 pip stop would have been great at right price, right pair, right session and right time. All four boxes would have been check out. All about risk management and lot size.
The double top pattern is also a type of reversal patterns similar to the head and shoulders pattern. It is also a bearish reversal pattern, but the difference is that this pattern has two high swings that loom around the same price level.
The price level in the double top pattern forms a peak. It retraces itself back to a support group only to create a peak again just before it moves away from the ongoing trend.
In terms of graphical representation, this pattern almost has an M shape, making it relatively easy for traders to spot it on their trading charts.
One thing to take care of while dealing with both the double top and the double bottom pattern is to be entirely sure of their interpretation.
If identified on the right on time and interpreted correctly, both of these patterns can be an invaluable asset to you. However, if misinterpreted, then these or any Forex chart patterns can make irreparable your trades.
Rules:
1) Conservative traders will set up trades on breakout of neckline: on chart easy 25 pips with 12.5 pip stop would have been great at right price, right pair, right session and right time. All four boxes would have been check out. All about risk management and lot size.