Double Top
Well-DocumentedA bearish reversal pattern shaped like the letter "M": price rallies to a peak, retreats to a support level, rallies again to a similar peak, then fails and breaks the support.
Candlestick chart rising to a first peak, pulling back to a support level, rising again to a second peak at roughly the same height, then breaking down decisively through the support level.
Sample data — illustrative only, generated to demonstrate this pattern's shape. Not a real security.
Identification Criteria
- Appears after a clear uptrend, not in the middle of a range.
- Two peaks form at approximately the same price level, usually within a few percent of each other.
- A trough between the two peaks establishes a support (or "confirmation") level.
- The second peak often forms on lower volume than the first — a common warning of weakening demand.
- Time between the two peaks typically ranges from a few weeks to a few months on daily charts; peaks that are too close together are more likely to be noise.
Formation Logic
The first peak is a normal high in an uptrend. The pullback and second rally test whether buyers can push through that level again. When the second attempt fails at a similar price, it signals that the prior high represents a genuine supply zone rather than a temporary pause — the balance of power has shifted from buyers to sellers.
Breakout / Confirmation Rule
Confirmation requires a decisive close below the support level formed by the trough between the two peaks. Until that close occurs, the "M" shape is only a candidate pattern — many double-top-looking shapes resolve as continuation of the uptrend instead.
Measured-Move Price Target
A common illustrative measured-move technique: take the vertical distance from the peaks down to the support (confirmation) level, then project that same distance below the breakout point. Treat this as a rough planning heuristic, not a precise forecast.
Common Pitfalls
- Calling the pattern before the support level actually breaks — the second peak alone is not confirmation.
- Two peaks that differ by more than roughly 3-4% are less reliable as a genuine double top.
- Low trading volume or a thinly traded instrument can produce look-alike "M" shapes that are pure noise.
- A quick, sharp break of support followed by an equally quick recovery ("bull trap") is common — waiting for a sustained close reduces this risk.