Double Top and Bottom

Posted in Finance, Accounting and Economics Terms, Total Reads: 366
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Definition: Double Top and Bottom

This is a chart pattern used in technical analysis for identifying the general trend of a stock in the market.


Double top: It appears as two consecutive tops of around same height and at similar price and the difference between of two peaks is called a valley. When the pattern falls below the neckline, this indicates a start of trend of fall in price until it settles at a new neckline. However, if the price rises from the neckline again, then it specifies reaching a new top thus forming a triple top pattern, after which the prices will fall below neckline.


Double bottom: This specifies the end of a declining pattern and beginning of uptrend in the market. The pattern has two bottom points and one peak and the difference between bottoms is called a valley. After the second bottom, the rise in stock price starts.

 

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