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Double Top

How to Identify & Trade Double Tops and Double Bottoms in 2021Hello Traders, Here is some of my Favorite and Most simple Educational Chart Patterns that you should know in 2021. In this Lesson I will Show you how to Identify & Trade These Patterns! These patterns are seen daily in Stocks, Forex and different markets across the Globe. I hope you will find this information educational & informative . Your support is appreciated with a like & Comment Lets dive Right Into it!! What Is Double Top and Bottom? Double top and bottom patterns are chart patterns that occur when the underlying market moves in a similar pattern to the letter "W" (double bottom) or "M" (double top). Double top and bottom analysis is used in technical analysis to explain movements in the Market, and can be used as part of a trading strategy to exploit recurring patterns. KEY TAKEAWAYS A double top has an 'M' shape and indicates a bearish reversal in trend. A double bottom has a 'W' shape and is a signal for a bullish price movement . Understanding Double Tops and Bottoms Double top and bottom patterns typically evolve over a longer period of time, and do not always present an ideal visual of a pattern because the shifts in prices don't necessarily resemble a clear "M" or "W". When reviewing the chart pattern, it is important for traders to note that the peaks and troughs do not have to reach the same points in order for the "M" or "W" pattern to appear. Double top and bottom patterns are formed from consecutive rounding tops and bottoms. These patterns are often used in conjunction with other indicators since rounding patterns in general can easily lead to fakeouts or mistaking reversal trends. Double Top Pattern (M Formation) A double top pattern is formed from two consecutive rounding tops. Rounding tops can often be an indicator for a bearish reversal as they often occur after an extended bullish rally. Double tops will have similar inferences. If a double top occurs, the second rounded top will usually be slightly below the first rounded tops peak indicating resistance and exhaustion. Double tops can be rare occurrences with their formation often indicating that investors are seeking to obtain final profits from a bullish trend. Double tops often lead to a bearish reversal in which traders can profit from selling at the neckline (with confirmation) to form a downtrend. Double Bottom Pattern Double bottom patterns are essentially the opposite of double top patterns. Results from this pattern have the opposite inferences. A double bottom is formed following a single rounding bottom pattern which can also be the first sign of a potential reversal. Rounding bottom patterns will typically occur at the end of an extended bearish trend. The double bottom formation constructed from two consecutive rounding bottoms can also infer that traders are following the Market to capitalize on its last push lower toward a support level. A double bottom will typically indicate a bullish reversal which provides an opportunity for Traders to obtain profits from a bullish rally. After a double bottom, common trading strategies include long positions that will profit from a rising Market price. Limitations of Double Tops and Bottoms Double top and bottom formations are highly effective when identified correctly. However, they can be extremely detrimental when they are interpreted incorrectly. Therefore, one must be extremely careful and patient before jumping to conclusions. For example, there is a significant difference between a double top and one that has failed. A real double top is an extremely bearish technical pattern which can lead to an extremely sharp decline in the market. However, it is essential to be patient and identify the critical support level to confirm a double top's identity. Basing a double top solely on the formation of two consecutive peaks could lead to a false reading and cause an early exit from a position. How to Trade these Patterns Correctly using the information i have given above 1. Identify The Double Top or Double Bottom 2. Wait for the market to break the previous support or previous resistance to confirm this pattern " M or W" ( as show in my chart above) 3. Be Patient & wait for the market to come back to the "Neckline" (Previous support or Previous Resistance) (as shown in the chart above) 4. When the market will reach the "Neckline area aka support/resistance" monitor the "PRICE ACTION" (in the notes on chart) 5. Monitor the PRICE ACTION for a "Change" in the Market Environment "example" ----- (HL/HH,LH/LL). 6. It is Important to monitor the "Price Action" in the neckline area for some confirmation ( Break of structure or Candlestick confirmation) 7. Always wait for proper confirmation ( at least 2-3 different types of confirmation before Entry) 8. Always Use risk Management & Practise Safe trading. 9. Patience is always the Key to Success! 10. Enjoy The profit when you finally get to ride these Patterns :) Thanks for Reading this article, I hope that it was informative and educational As always, If you have any questions / Comment or Concern Please feel free to leave them below. Hope to see you in the next Educational Post! Global Fx Education
TVC:DXYEducation
by Global_Fx
23
📊 Chart Pattern Basic | Lesson #1Double Top A double top is a reversal pattern that is formed after there is an extended move up. The “tops” are peaks which are formed when the price hits a certain level that can’t be broken. After hitting this level, the price will bounce off it slightly, but then return back to test the level again. If the price bounces off of that level again, then you have a DOUBLE top! Double Bottom The double bottom is also a trend reversal formation, but this time we are looking to go long instead of short. These formations occur after extended downtrends when two valleys or “bottoms” have been formed. Triple Top A Triple Top is a chart pattern that consists of three equal highs followed by a break below support. The chart pattern is categorized as a bearish reversal pattern. All three highs should be reasonably equal, well-spaced, and mark clear turning points to establish resistance. The highs do not all have to exactly the same level but should be “close enough”. Triple Bottom A Triple Bottom is a chart pattern that consists of three equal lows followed by a break above resistance. The chart pattern is categorized as a bullish reversal pattern. All three highs should be reasonably equal, well-spaced, and mark clear turning points to establish support. The lows do not all have to exactly the same level but should be “close enough”. Please like the idea for Support & Subscribe for More ideas like this and share your ideas and charts in Comments Section..!! Thanks for Your Love & Support..!!
BYBIT:BTCUSD.PEducation
by Faibik
NZDUSD Daily & H4 Comparison Analiysis for next weekA Double Top formation on D1 followed by another Head & Shoulder Price Action Pattern on H4 which gives me Kicker to Trigger the Short option on this pair on the upcoming week. Also to keep in Mind if not H&S on H4, then a Double Top from the same can also give me a good Sniper entry to go Short. Depending on the Kicker and will decide my SL level but TP not less then 1:2 Trade Execution can be expected anywhere between Tuesday - Wednesday. So keep watching this one and put it on your To-Do List
Education
by Manjinder_Singh_Sasan
2
Double Top Chart PatternThe Double Top or Bottom Chart Pattern is a reversal pattern as its name implies, the pattern is made up of two consecutive peaks or troughs that are roughly equal, with a moderate trough or peak in-between. This reversal could signal an end of an uptrend or downtrend. ( Double top with an end to an uptrend in this case). Double Top Chart Pattern A Double Top chart pattern is comprised of three main components: After a long bullish trend , the price reaches the highest point of the current uptrend After the highest point, there is a decline in price getting support from the support line After this trough the price again increases and reaches another peak falling to the same support line The long bullish trend is the prior trend which is reversed once the pattern is completed, with reaching the highest point of the current trend marking the 1st peak followed by a trough which gets support from the support line i.e. the neckline. Later the price further increases to reach the 2nd peak which gets resistance from the resistance line of 1st peak (usually). Once the price falls and breaks the neckline the formation is complete. The target price for the same is taken as the difference between the neckline and the 2nd peak, with the neckline acting as resistance after the pattern completion. Volume is a confirmatory indication that increases substantially as the breakout is observed and confirms the double top pattern completion! There are few limitations as well to the Double Top Pattern: Can be extremely harmful if identified incorrectly Sometimes the peaks or the trough could be just normal resistance than long-lasting change Might get converted to Triple top, so pay attention to the volume carefully Therefore, one must be extremely careful and patient before jumping to conclusions. Go Trading!!! Further, there are four different types of Double Top pattern based on their respective average rises and failure rate percentage, namely: Adam-Adam; Adam-Eve; Eve-Eve, and Eve-Adam. Where the average is the measure of the price movement from the breakout point to the prime point i.e. 1st peak or the Ultimate high. ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
COINBASE:BTCUSDEducation
by Mudrex
6
USDCHF 4H DOUBLE TOPStep #1: Identify the Phase of the Market. The Double Top reversal needs a uptrend. Just because you can spot the reversal it doesn’t mean you have to jump in willy-nilly. Remember, we need the right context and everything needs to line up for a trade-able setup. So, the first step is to identify the phase or market condition. At any given moment the market can be trading either up, or down, or it can go sideways. Establishing the phase of the market aka identifying the trend is probably the biggest ingredient that can determine the success rate of double bottom pattern technical analysis. Step #2: The historical precedent. An A++ Double Top Reversal is composed of 2 Rounded Tops The second step of the Double Top is to find what we call the historical precedent or a chart pattern. We don’t want to make a trading decision without price confirmation, and in our case, we use the reversal pattern. You need to identify two rounded tops in order for the pattern to be considered trade-able. But, what is a rounded top? In technical analysis, a rounded top is simply a price formation that typically occurs after an uptrend, prices move upwards and then quickly rallies creating a rounded top. Now, of course, that depending on the structure the rounded top will vary in size and magnitude. But the idea is that we need a quick move up followed by a quick move down to define a rounded top Note* A valid double top reversal has two rounded tops. Step #3: Allow a maximum of 10 pips variation between the two tops. Don’t seek perfection, because in trading you need to get rid of your idealistic mindset as the pattern will not look perfect all the time, so be flexible. This is the reason why we need to allow a maximum of 10 pips variation between the two tops. The probability of two tops happening at the same exact price level is almost impossible. Now, we to determine an entry technique for our chart pattern strategy. Step #4: Sell when Double Top breakout candle closes below the neckline. After we identify the phase of the market and the characteristics of a good reversal we need to wait for confirmation that momentum is shifting. The breakout candle is our signal that the momentum has shifted and it’s what it confirms and validates the double top pattern. You’ll see the double top breakdown happen over and over again, but it’s important to analyze them within the context of the market trend. The next logical thing we need to establish for the strategy is where to take profits. Step #5: Take Profit at the same price distance as measured from the highest peak to the Neckline The minimum profit target for this type of trade is approximately equal to the same price distance as measured from the double top to the neckline. If we project the same price distance to the downside we obtain our first take-profit zone for the strategy. The double top pattern can produce a major reversal so we advise you to be very flexible with your profit target not to miss any big profit opportunity. Step #6: Place the protective stop-loss slightly above the resistance created by the Double Top reversal The Double Top chart pattern strategy gives you a simple way to quantify risk because you can place your protective stop-loss slightly above the double top pattern. The double top pattern really gives you the opportunity to also trade with a tight stop loss, which is great as we always want to keep losses at a minimum. Note*** The above was an example of a SELL trade… Use the same rules – but in reverse – for a BUY trade, but this time we’re going to use the double bottom pattern. Conclusion There is no other chart pattern that illustrates the trend reversal. However, despite the high success rate you still need to use a protective stop loss and to wait for the breakout when trading with the double top chart pattern strategy. You can also trade with the breakout triangle strategy. The bottom line is that you still need a plan to successfully trade the double top breakout. Our double top chart pattern strategy should answer all your questions in regard to how to make money with this simple pattern.
Education
by Tradingstrategyguides
2
This is NOT a double bottomWe often take a double bottom to be a sign of a bullish market structure. A double bottom with a breakout ends up looking like a 'W'. However, it's NOT double bottom when the second low is LOWER than the first low. The second leg must be EQUAL or SLIGHTLY GREATER than the first low, for it to be considered a valid 'W'. Why? Well, the second leg of the double bottom is just a test of the first initial lows. If we break those old lows, we haven't really established a bottom. I can see how taking this trade may have been tempting; it's pretty damn close to a 'W'. But not quite, and it's evident what happened shortly afterwards.
NYSE:BMAEducation
by realcapmillen
DXY - Monthly - Multi-Timeframe Analysis Series 1Continuing with another episode of Multi-Timeframe Analysis Series 1, I'd like to break down the DXY. The DXY being weighted as follows: EUR - 57.6% JPY - 13.6 % GBP - 11.9% CAD - 9.1% SEK - 4.2% CHF - 3.6% As you may imagine, there's a lot more interest in using the DXY for a correlation / confluence tool when trading the EURUSD. The EURO equates to over half of the overall weight of the index, meaning there's a majority interest in the EUR vs USD. We can use this to our advantage, alongside the USDOLLAR INDEX, to add positive or negative trade factors when considering positions across USD pairs and commodities. Comments Looking at the Monthly timeframe we appear to be stalling between the 61.8% retracement of A>B as indicated on the chart. Price is showing high test candles at this level, as well as a potential rolling double top (continuation formation). Given the circumstances of this in its current form, 94.00 could easily be on the cards as we move into the second quarter of 2019. Key Note At time of writing this, it's the current monthly candle cannot be considered an indication of direction just yet as it hasn't fully formed (being the 24th of the month).
TVC:DXYEducation
by robdee4x
3
Double bottom and Double topThe Double Bottom Reversal is a bullish reversal pattern typically found on bar charts, line charts, and candlestick charts. As its name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between. It is important to remember that the Double Bottom Reversal is an intermediate to long-term reversal pattern that will not form in a few days. Even though formation in a few weeks is possible, it is preferable to have at least 4 weeks between lows. Bottoms usually take longer than tops to form and patience can often be a virtue. Give the pattern time to develop and look for the proper clues Double top is a chart pattern, characterized by two consecutive peaks in price, that signals a potential bearish reversal of an uptrend. The double top chart pattern is considered to be an indicator of an intermediate- or long-term reversal in price. After two attempts by bulls to push the price above key resistance levels, many bulls may capitulate and bears often take control over the market price.
COINBASE:BTCUSDEducation
by CryptoC77
The Famous Risk/Reward Myth If you have been trading or interested in trading for some time, I am sure you have heard some online "teachers" say that you MUST have a 1:3 or 1:5 R/R in order to be profitable.. That is absolutely FALSE! If you hear a "professional trader" say that, odds are they are not truly a trader.. A professional trader understands that R/R & win % are correlated. The higher the R/R, the lower the win %, The lower the R/R, the higher the win %.. Determining an appropriate R/R should be decided based on your strategies performance (derived from backtesting different targets/stop losses) as well as your psychology. In other words, R/R and win % should be viewed as one metric, as they MUST work together in order for you to be a consistently profitable trader. As for the psychology aspect- are you a trader who can lose 70 out of 100 trades so long as your making money? I personally prefer to win 60-70% of my trades but that decision is up to you. The important thing is that you balance these two metrics to ensure profitability while catering to your psychology to maintain confidence in your strategy. There is no right or wrong in trading, only what works and what doesn't! If you are not sure what Risk/Reward or Win % is, please see below- Win % Win/Loss Ratio also referred to as Profit/Loss Ratio What Is Risk/Reward? Risk/Reward is a used by traders to determine how much capital they are willing to risk in order to make a desired reward. For Example- lets pretend you are using a trading strategy that has a 1:1 R/R & you are risking $10 on each trade. A 1:1 R/R would mean that you are risking $10 to potentially make $10. Using this same example with a 1:2 R/R, You are risking $10 to potentially make $20. For a 1:3 R/R, You are risking $10 to potentially make $30 and so on. In order to successfully make a profit with a 1:2 R/R, the market has to move twice as far to hit profit targets than it does to hit your stop loss. In order to successfully make a profit with a 1:3 R/R the market has to move three times as far to hit your profit targets than it does to hit your stop loss & so on.. By default, the further price has to move to hit your profit target, the less likely it is for the trade to be successful, ultimately lowering your win %. With that said, it is important to note that a lower win % does not necessarily mean the strategy is more or less profitable than a strategy with a higher win %. Lets look at some examples below: Example 1- You are using a strategy that has 1:3 R/R and a 30% win %.. In this example we are going to look at 100 hypothetically trades. 70 losing trades at $10 each (70 x $10 = -$700) 30 winning trades at $30 each (30 x $30 = $900) Net Profit/Loss = $200 Example 2- You are using a strategy that has a 1:1 R/R and a 60% win %.. Again based on 100 hypothetical trades. 40 losing trades at $10 each (40 x $10 = -$400) 60 winning trades at $10 each (60 x $10 = $600) Net Profit/Loss = $200 Looking at the examples above, we can see that both strategies made the same amount of money even though one strategy wins 30% of trades, while the other wins 60% of trades! Of course there are small variations to the examples above as not every strategy with a 1:3 or 1:1 R/R will have a 30 or 60% win/loss ratio however the overall concept stands and should be taken into consideration whenever developing or trading ANY strategy. In my last tutorial- " Simple Patterns Tutorial, The Correct Way To Trade Double Tops " I asked you all to vote on which double top you thought would perform the best out of the 3 common double top formations shown above.. Each top received votes however, top # 2 received the most votes. The answer to this question may have surprised you however, it will be highly beneficial to your trading! As always I hope this was helpful, the information shared in this educational post regarding risk/reward is an extremely CRUCIAL aspect of risk management and remaining consistently profitable so be sure to read over everything multiple times if need be. Please give this a thumbs up if it was helpful and you would like me to post more material regarding risk management. Also feel free to comment below or message me with any questions you may have. If you would like access to a free position size and risk calculator that I personally use myself, please use the link below to request yours goo.gl OR Visit tradersnsights.com/calculators-tools
Education
by Alec40
4
Simple Patterns Tutorial, The Correct Way To Trade Double Tops In this short tutorial, we will look at the three most common Double Top formations along with how to properly trade them and when/where they typically appear on a chart. Double Tops work very well as trend continuation patterns for the obvious reason that you are trading with the underlying trend (strength) in the market however, Double Tops can also be a great tool for identifying and trading trend reversals. I do not recommend trading these patterns as reversals at every support or resistance level, as trading this way will most likely not be a consistently profitable trading strategy. One method to trading these patterns as reversals is to use higher timeframes to identify important price levels. For Example- You may use the Daily chart to identify important support/resistance structure levels while using the 1hr chart to actually identify and trade the double top itself.. Every strategy should have something called conditions and criteria's for entry.. If you follow my work, you have heard me say this in the past. In the case of this example, A daily level of structure Support/Resistance would be our condition and a double top on the 1hr chart would be our criteria for entry.. You rules should state this: Condition: 1) Price must retest a daily level of support or resistance in order to look for entry criteria. Criteria: 1) After price has retested a daily level of support/resistance, I am allowed to look for a double top entry on the 60 minutes timeframe. -See example of this exact trade at bottom of description (Chart 4 and 5) Chart One: Most Common Double Tops Chart Two: Examples Of Double Top Reversals & Trend Continuation Chart Three: Double Top Trade Examples Chart Four: Daily Retest Of Support/Resistance: Chart Five: Double Top On 60 Minute Timeframe: Often, you will notice that price is up-trending on the daily chart but down-trending on the hourly charts. Many traders get confused regarding how to handle this confliction of trend.. One way to handle this is by doing what is stated above. Use a higher timeframe like the daily chart to find important price levels, and use a lower timeframe like the hourly or minute charts to trade at these levels. Just because the daily trend is up does not mean we cannot trade a double top reversal on the 1hr chart as that timeframe may be down-trending in a perfectly healthy daily uptrend.. I hope this was explained clearly, please feel free to ask me any questions you have in the comments below or via private chat & I will be happy to help. Also please let me know what double top you think is the best to trade (see chart 3) in the comments below. I will do a follow up lesson to answer this question I am asking you. I think the answer may surprise you & know it will be a AAH-HHA moment in your trading journey! If you would like to put in a request regarding what trading content you'd like to learn more about, please use the link below to submit a vote for future trading tutorials and topics! tradersnsights.myshopify.com Free Position Size Calculator: goo.gl TradersNsights Facebook: www.facebook.com Thanks Traders, as always I hope this was helpful to you!
Education
by Alec40
8
XRP : example of double top with pullbackMy previous idea (October 11, 2018) on Tradingview already had a double-top pattern with pullback running on XRP. We can see that we had a double top of the same height signaling a resistance (excluding the very fast wick of September 21, 2018 since it was immediately corrected) With this similar height of the two tops, this makes it possible to objectively validate the figure in double top. The central hollow between the two tops gives us the basis of a support line called neckline. The overly abrupt uptrend on the formation of the first summit was therefore defeated by the inability of investors to form new higher and higher highs. Which in terms of market psychology allows us to interpret this as a form of capitulation on the part of the bulls. Prices are stuck under horizontal resistance, showing signs of weakness, providing an opportunity to short the market as I proposed in my previous ideas. Then after break, a small return of the courses was formed on the neck line, what is called pull back, as already represented on my idea of October 11, 2018. The interest of this chartist configuration is to show the shortness of the buying current and it is then possible to determine a downward objective substantially equal to the height of the double top vis-a-vis the neckline (see my differences price quoted on this chart). Here, the goal is clearly a return on the old support of XRP, and, that being solid, to consider a possible rebound. It's important to note that we attended on October 15, 2018 at a crypt scene hit: Bitfinex stable-coin, Tether (USDT), recorded a sudden drop of more than 15%. This inevitably created a panic movement and a muddy effect communicating to Bitcoin and the set of Altcoins (the latter being totally dependent on Bitcoin fluctuations), including on XRP. Thus, the fall I was waiting for Pullback on XRP was stopped by a green candle, forming somehow an elongated pull back. But for all that, I don't think that this succinct and totally artificial event could invalidate the sales signal given by this double top pattern. However, it's crucial in the small world of cryptocurrencies to note how much Bitcoin, along with its stable-coin Tether, is still the barometer of all altcoins: a turnaround figure as obvious as it is on XRP can therefore be disabled at any time, or at least delayed (lengthened in time), by instability on Bitcoin (and Tether). Finally, it is also possible to confirm the validation of this chartist pattern with the analysis of transaction volumes: with a tendency to weaken during the formation of the second peak and to re-increase with the ensuing bearish reversal (slight runaway sales).
BITFINEX:XRPUSDEducation
by MaxHodler
3
Education post 9/100 – How to trade double top pattern?The double top pattern is one of the most common technical patterns used by Forex traders. It’s certainly one of my go-to methods of identifying a potential top. Just as the name implies, this price action pattern involves the formation of two highs at a critical resistance level. The idea that the market was rejected from this level not once, but twice, is an indication that the level is likely to hold. However, as simple as that may sound, there are a few critical things that must be present for this topping pattern to be useful (and profitable). By the time you finish with this lesson, you will know exactly how to identify a double top as well as how to enter and exit the pattern to maximize profits.
Education
by GroundStoneHoldings
Double TOP - Reversal PatternDouble top is a reversal chart pattern which means the actually uptrend will be changed to bearish.In this chart pattern we see consecutive double price peaks This patern occurs at the top of an massive uptrend.After reaching a high like 44-60 weeks high(for exemple) the price is moving to make another higher high but in this second peak bulls slowly will lost their confidence and also volume is still low The bearish chart pattern is confirmed when the price breaks down below the low point of through Often traders is started sell-off which will result into a huge red volume candle and also a short term coin-capitalization Top of these peaks wll be turned into a huge long term resistance
BITFINEX:BTCUSDEducation
by CryptoRomaniaTD
GBPUSD: How To Spot This POWERFUL Setup Like We Did! +350 pipsPsssttt!!! Want to know how it is that we caught this BIG drop down and are now in profit over +350 pips? Yes? Then read on! This setup does repeat itself A LOT! If you can spot it, maybe you can bank pips like my subscribers and I do! First, you need to know in what wave are prices in. If you look at the Daily chart, you see that I marked off that BIG move up as a 5-wave which could turn out to be a wave (1) or a W. For now, that isn't important. Only that the current move up is impulsive which wave 1's and W's both are. If you take a close look at my overall wave count for that impulsive move up, you will notice that where prices are now is all part of a final wave (v) of that possible (1) or (W). And within that wave (v), prices completed a strong wave iii which formed the first peak of a double top. Of course we didn't know that it would become the first peak of a double top at the time that wave iii completed. But that also doesn't matter to this pattern to know that yet. So from that wave iii peak prices dropped and that drop was corrective so we could guess that the wave iii ended. But after that drop, prices began moving back up reaching the same price level as that wave iii peak before. At this point, could you tell that it was going to be a double top? Of course not! In fact, at that time, this is how I was looking at it: But because at that moment, prices were needing to break over the resistance formed by the wave iii peak, that wasn't a time to BUY or SELL! It was a time to sit and watch and be PATIENT! So we waited and 3 days later, this is what happened. Lo and behold...a POSSIBLE double top was forming: This is the way it looked on the 4HR chart at that time.....a very good probability it was a double top! : Now when I saw this on the 4HR chart, I knew with high confidence that my count was wrong and I had to adjust it to this one which makes it a flat wave iv: Now here are the 2 "ingredients" to this setup that you need to know in order to trade it: 1. that prices are in a correction (which this is) 2. a SOLID double top is in place on the Daily TF and confirmed on the 4HR TF (which at this point although not confirmed is nevertheless already there. Make SURE you know what the rules of a double top are!) Why this works? When you have a double top, almost 100% of the time, they appear during CORRECTIONS and ARE NOT a signal that a complete reversal is at hand but rather only a retracement is coming. Why is this? Because if you know wave counting, truncated wave 5's are exceedingly rare and if you have a impulse wave (which we do here), in order to have that wave 5 end on a double top, it would need to be a truncated wave 5. So since they are so rare, odds are that the double top DOES NOT represent the end of the impulse wave but rather just part of a correction within that impulse wave. So that is why when I see a double top, I'm thinking a wave 4 most likely. Much more common in wave 4's than 2's since 4's are much more likely to be a flat. Oh yeah, double tops appear in flats. not zig zags. Ok, so we now have a double top in a wave 4 correction. Well, if you look at my previous chart above, you will see that in order to have that wave 4 correction continuing, that means that (in this case) the waves (w) and (x) have already completed with that second peak being the end of the wave (x). Well, guess what follows a wave (x) in a correction? That's right! An IMPULSIVE wave (y)! That means that off of a double top, then next move should be a strong one and of course, it was! And that is how this setup works! It happens over and over again! If you know what to look for! I just told you! Hit me up if you want to learn more! Follow me on my Facebook group and/or Twitter below.
Education
by EverythingForex
3
Example of a Doubletop pattern on FDX stockFedex corp stock price, formed a doubletop pattern. This pattern consists of the following: the price move higher and is rejected in a resistance (first Top). then it goes down and makes a minimum (neck line) and bounces back to the previous resistance making a second Top and bouncing back towards the neckline and breaking it down. To confirm this pattern, the price should close below the neckline. At this point you should make a short. The profit is the distance between the maximum price and the minimum price. In some cases you can see a pullback. This could be a second chance to short the stock.
NYSE:FDXEducation
by heco08
Double Top definition & 2618 trade setup ®What is a Double top, and how to trade it?! 1. We should see a V shape between the two tops; 2. Look left and search for previous structure and eventual PRZ (price reversal zones); 3. The Highest High from the retest candle, MUST meet the previous Highest Close ; (it can go above the HH) 4. The retest candle, MUST CLOSE below the previous Highest Close ; ( CRUCIAL ) 5. Once the price breaks the previous structure , it will give us a confirmation of the double top; 6. Price must find some support above previous structure ; 7. Wait the 61.8% retracement ; (It can never happen, indeed, and keep with the free-fall, and that's the risk of not taking this trade aggressively from the real top and wait a confirmation); -I would suggest staying out of the trade if necessary* 8. Sell the 61.8% with one eventual AB=CD basic pattern as target, and eventualy a deep further downward movement (check previous structure for TP targets). Safe trades ;) Trading Jazz
Education
by Andre_Cardoso
7
EURAUD: Reviewing The Tape (Education not a trade idea)I've already written my "Trading Recap" blog post for today but I wanted to share something with you guys. For you guys that have been following along with my blog you know that I've been working on an article looking at professional athletes and professional traders. One of my main comparisons is the amount of preparation and review that both do. Just like Peyton Manning or Tom Brady do after every game, after each trading day I review the tape, meaning that I go back through my trading day and critique myself. After all, in this industry we are our own bosses so if we don't do it who will? Last night I posted a trade looking for a potential breakout to the upside on EURAUD, although we did test the highs of our previous structure level we never got the break that I was looking for and it ended up being a scratch trade (breakeven). This morning in our Warroom meeting Jason Stapleton fired off 2618 idea for this same pair. (I'll attach a link to the FREE 2618 training at the bottom of this post). In the live room we ended up finding a bearish Cypher at the same level and ended up getting short as well. After banking some good pips, I spend the rest of our session going through the rest of my portfolio and basically but this pair on the back burner. BIG MISTAKE, if only i would have paid more attention to it, i would have seen that IF our 2618 setup were to rally to 2nd targets THEN we'd also have a Bat pattern completion which we plant a stop & reverse at. So yeah I left a few pips on the board today but the important part is that I was able to identify my mistake and turn it into a learning experience. For those who don't take the time to review their day, well that mistake may continue to be a future mistake. Thanks for taking the time to read this and I'll see you next week at the Technical Trader Workshop!!! FREE 2618 Training Lesson: www.youtube.com 2015 FREE Technical Trader Workshop: promos.tradeempowered.com
Education
by Akil_Stokes
10
GBPUSD - a textbook example of a 2618 tradeSince some people do not know what a 2618 trade is, and the opportunity is there, I thought I'd make an example for educational purposes. A 2618 trade is probably the safest way to trade a double top or double bottom and although the Risk/Reward ratio is a little less favorable, my preferred way to enter a double top/bottom trade. Basically, you wait for the downward trend, away from the double top (the upward for double bottom) to break and close below the neck line of the double top/bottom. Then, if a retracement occurs, you put a limit order at the .618 retracement of the previous leg of the move, in the direction of the previous move. You might miss a couple of double top/bottom trades if no retracement occurs, but percentagewise you'll win a lot more of these trades. Hope this was informative to you, don't forget to hit the like button :)
Education
by Profit_Through_Patience
12