Definition
Double Top / Double Bottom
A double top is a bearish reversal with two peaks at similar levels; a double bottom is its bullish mirror at a low.
A double top forms when price hits a resistance level twice and fails to break it, then falls through the intervening low (the neckline) — an 'M' shape signalling a reversal down. A double bottom is a 'W' shape where price tests support twice and then breaks above the middle high, signalling a reversal up.
Indian chartists use these on Nifty, Bank Nifty, and stocks as classic reversal setups, entering on the neckline break with a target equal to the pattern's height. Volume usually falls on the second peak or bottom and rises on the breakout, adding confidence.
Related terms
- Head and ShouldersHead and shoulders is a bearish reversal chart pattern with three peaks — a higher middle peak between two lower ones.
- BreakoutA breakout is when price moves decisively beyond a defined support, resistance, or pattern boundary, often starting a new move.
- TrendlineA trendline is a straight line connecting a series of highs or lows to visualise the direction and slope of a trend.
- Support and ResistanceSupport is a price level where buying tends to halt a fall; resistance is a level where selling tends to cap a rise.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.