How to Trade the Double Tops Stock Indices Chart Pattern

To analyze the double tops stock indices chart patterns a indices trader needs to first learn about the technical analysis of double tops stock indices chart patterns explained below.

Double Tops Indices Chart Pattern

Double tops stock indices chart pattern is a reversal stock indices chart pattern that forms after an extended upward indices trend.

As its name implies, this double tops stock indices chart pattern formation is made up of two consecutive peaks on the stock indices chart that are roughly equal, with a moderate trough in between the two peaks.

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 trading market breaks below the neckline.

In Indices, this double tops stock indices chart pattern 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 neckline is broken and the stock indices 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 indices chart pattern forms after an extended move upwards- upward indices trend
• This double tops stock indices chart pattern signal indicates that there will be a reversal in the stock indices trading market trend
• We sell when stock indices price breaks below the neckline; as explained on the stock indices trading example explained and illustrated below.

Technical Analysis of Double Tops Indices Chart Pattern?

Double tops stock indices chart pattern look like an M-Shape pattern, the best reversal stock indices signal from the double tops stock indices chart pattern is where the second top is lower than the first top as shown below:

This means that the reversal stock indices signal can be confirmed by drawing a downward indices trend line as shown below. If a indices trader opens a sell indices trade using this double tops reversal stock indices signal the stop loss will be placed just above this downward indices trend line.

How to Analyze a Double Tops Indices Chart Pattern in Indices Trading