Double Top

Posted in Finance, Accounting and Economics Terms, Total Reads: 889

Definition: Double Top

This a term used in technical analysis to describe the phenomenon of a rise first, then a fall and again a rise after wards to the same level. The same can be seen in the figure below

The phenomenon happens when the technical chart looks like English alphabet M. This happens when the market is on the rise and hence depicts a positive sentiment. The drop is mainly because of the minute corrections happening in the market and the minimum price reached between the two peaks/tops is referred to as valley. The fluctuation reverberates with the psychology of the buyers. When the supply is greater than demand a peak is reached, the market starts to see the overpricing and start selling it till it comes to the valley. The Bull Run again takes over and price rises to peak 2.The frame is also important in this phenomenon. If the top appears with a very little time gap in between than it signifies that this is only a small part of correction/consolidation nad pattern will resume. So,the The market faces a resistance to go over the price of the tops. So, it is also referred to as resistance level. There is a similar term called double bottom explaining the bottom level resistance and appears in a bear market.


Hence, this concludes the definition of Double Top along with its overview.

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