How to Differentiate a Double Bottom Chart Pattern from a Double Top Chart Pattern

How Do I Trade Indices and Differentiate a Double Bottom Chart Pattern from a Double Top Chart Pattern?

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

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

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

To identify double top & double bottom stock indices patterns the example below explain the 2 stock indices trading patterns:

Double Tops Trading Pattern

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

This double tops stock indices chart pattern formation is considered complete once stock indices 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 indices chart pattern formation occurs when the stock indices market breaks-out below the neckline.

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

Summary:

• Double tops stock indices chart pattern forms after an extended move upward
• This double tops stock indices chart pattern formation indicates that there will be a reversal in indices market
• We sell when stock indices trading price breaks out below the neckline: see below for the explanation.

Double Top Pattern - How Can I Differentiate a Double Bottoms from a Double Tops?

Double Bottoms Pattern

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

This double bottom stock indices chart pattern formation is considered complete once stock indices 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 stock indices market breaks-out the neck line to the upside.

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

Summary:

• Double bottom stock indices trading chart pattern forms after an extended move downward
• This Double bottoms stock indices chart pattern formation indicates that there will be a reversal in stock indices trading market
• We buy when stock indices trading price breaks out above neckline: see below for an explanation.

How Can I Differentiate a Double Bottoms from a Double Tops?

How to Differentiate a Double Bottom Chart Pattern from a Double Top Stock Indices Chart Pattern