Glossary
Double Top
A bearish reversal pattern of two peaks at about the same price, completed when price falls below the trough between them.
On this page
A double top is an M-shaped pattern that can mark the end of a rise. Price climbs to a high, pulls back, rallies to about the same high and fails again. The repeated rejection at one level suggests buyers have run out of steam there. The pattern counts as complete only when price closes below the low point between the two peaks, a level traders call the neckline.
What traders look for
- An established Uptrend leading into the first peak.
- Two highs within a few percent of each other, usually weeks apart rather than days.
- Weaker participation on the second peak: lighter volume, or a momentum Divergence such as a lower RSI reading.
- A decisive close below the neckline, which turns that old Support into likely Resistance.
Common mistakes
Calling a double top too early is the most frequent error. Plenty of markets touch a prior high twice, dip, and then break out to new highs. Without the neckline break, two similar peaks are just a range. Even after the break, many patterns snap back above the neckline within days. In a strong bull market, a double top may lead only to a modest Pullback before the advance resumes.
As with its bullish twin, the Double Bottom, the measured move is a convention, and success rates depend heavily on the exact rules used to identify the pattern.