Forex glossary
Double Top
A double top consists of two similar peaks separated by a trough after an advance. A break below that trough, the neckline, completes the classic bearish reversal pattern. Pattern height can provide a conventional target, which is not a prediction of the price actually reached.
Illustrative example
How does it work in practice?
Assume peaks at 110 and 109.8 with an intervening trough at 104. Breaking 104 completes the structure; projecting its six-unit height gives a conventional target of 98, without guaranteeing that outcome.
A case to work through
Peaks without a trough break
Hypothetically, peaks are 150 and 149.7, the intervening trough is 143 and the close is 144.
- The close remains above the 143 neckline and fails a close-below rule.
- A later high beyond a predefined invalidation threshold may reject the candidate.
What follows? Record an incomplete structure rather than assigning a future decline.
Example boundary: Peak-similarity tolerance and invalidation rules need defining in advance.
A useful distinction
Double Top / Double Bottom
A double top requires breaking the intervening trough; a double bottom requires breaking the intervening peak.
Check your understanding
Distinguish similar highs from a completed structure.
Show the answer and explanation
The completion condition is unmet
The close is one unit above the required level.
Geometry and pattern completion
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Related terms
Sources and documentation
- StockCharts – double top
Two peaks and the intervening trough's break as classical completion.
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