Technical Glossary / Chart Patterns
Double Top
Two highs at a similar price, with a trough between them, completed by a break of that trough.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A double top is a bearish reversal. Price rallies to a high, pulls back, rallies again to roughly the same high, and fails. The pattern is complete when price closes under the interim low, not when the second high prints.
How to identify it
Two peaks within a tolerance you would call "the same area," separated by a clear pullback. The second peak can be slightly higher or lower. The trigger is the valley.
Bullish reading
A second test that breaks and holds above the twin high is not a double top. It is a breakout.
Bearish reading
A close under the valley says the support between the two tests gave way. Risk belongs above the second high. A measured move uses the height of the pattern subtracted from the break.
Common mistakes
Shorting the second touch while the valley still holds. That is resistance, not a completed top.
Limitations
Equal highs in a strong uptrend fail often. The pattern is more useful after an extended advance than in the first pullback of a trend.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.