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How Can I Differentiate a Double Bottom from a Double Top?


How To Identify and Trade Double Bottoms Indices Trading Chart Pattern and Double Tops Indices Trading Chart Pattern


A double tops stock indexes chart pattern has an M shape and it occurs at a market top hence its name double top stock indexes chart pattern and it signals a bearish stock indexes price reversal in the stock indexes trading market. Once a double top stock indexes chart pattern is confirmed then the stock indexes trading market will be considered to be bearish, therefore a double top is bearish.


A double bottoms stock indexes chart pattern has a W shape and it occurs at a market bottom hence its name double bottom stock indexes chart pattern and it signals a bullish stock indexes price reversal in the stock indexes trading market. Once a double bottom stock indexes chart pattern is confirmed then the stock indexes trading market will be considered to be bullish, therefore a double bottom is bullish.



To identify double tops and double bottoms stock indexes chart patterns the examples below explain the two stock indexes chart patterns:


Double Tops Indices Trading Chart Pattern

Double tops stock indexes chart pattern is a reversal stock indexes chart pattern that forms after an extended upward indices trend. As its name implies, this double tops stock indexes chart pattern formation is made up of two consecutive peaks that are roughly equal, with a moderate trough in between.


This double tops stock indexes chart pattern formation is considered complete once stock indexes price makes the second peak and then penetrates the lowest point between the highs, called the neckline. The sell stock indices signal from this double tops stock indexes chart pattern formation occurs when the stock indexes trading market breaks below the neckline.


In Indices, this double tops stock indexes chart pattern formation is used as a early warning signal that a bullish Indices trend is about to reverse. However, double tops stock indexes chart pattern is only confirmed once the neckline is broken and the stock indexes trading market moves below the neckline. Neckline is just another name for the last support level formed on the Indices chart.


Summary:


  • Double tops stock indexes chart pattern forms after an extended move upwards

  • This double tops stock indexes chart pattern formation indicates that there will be a reversal in the stock indexes trading market

  • We sell when stock indexes price breaks below the neckline; see below for explanation.

How Can I Differentiate a Double Bottom from a Double Top?

Double Tops Indices Trading Chart Pattern - How Can I Differentiate a Double Bottom from a Double Top?



Double Bottoms Indices Trading Chart Pattern

Double bottoms stock indexes chart pattern is a reversal indices trading pattern that forms after an extended downward indices trend. Double bottoms stock indexes chart pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in between.


This double bottoms stock indexes chart pattern formation is considered complete once stock indexes price makes the second low and then penetrates the highest point between the lows, called the neckline. The buy indication from this bottoming out signal occurs when the stock indexes trading market breaks the neckline to the upside.


In Indices, this double bottoms stock indexes chart pattern formation is an early warning signal that the bearish Indices trend is about to reverse. It is only considered complete/confirmed once the neckline is broken. In this double bottoms stock indexes chart pattern formation the neckline is the resistance level for the indices price. Once this resistance is broken the stock indexes trading market will move up.


Summary:


  • Double bottoms stock indexes chart pattern forms after an extended move downwards

  • This Double bottoms stock indexes chart pattern formation indicates that there will be a reversal in the stock indexes trading market

  • We buy when stock indexes price breaks above the neckline; see below for explanation.

How Can I Differentiate a Double Bottom from a Double Top?

How Can I Differentiate a Double Bottom from a Double Top?

 

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