Two highs alike, an M on the chart:buyers twice failed to restart.
A bearish reversal chart pattern that forms after an uptrend, where price tests the same resistance level twice before breaking below the neckline support.
In plain words
A double top is a chart shape resembling the letter M: the price rises to a high, pulls back, rises again to about the same high and turns down again. The low between the two highs is called the neckline. Chart readers treat the pattern as complete only when the price falls below the neckline.
See it move
Reached: Second peak
Why it matters
It is read as showing that buyers twice failed to push the price higher, and so is said to indicate that a rise may be ending. Like every chart pattern it fails often: the price can go on through the two highs after appearing to form the shape.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
On an invented chart the price rises to 1.2000, pulls back to 1.1900, rises to 1.1995 and turns down again.
- 1Highs1.2000 and 1.1995, about the same level
- 2Neckline1.1900
- 3Height = 1.2000 − 1.1900 = 0.0100 = 100 pips
- 4The pattern is complete only below 1.1900
Until the price is below 1.1900 this is two highs inside a range, not yet a double top.
A common mistake
A second failure at a high is often taken as proof that the trend has turned. Uptrends pause at earlier highs all the time, and many then continue upwards.
Check yourself
Educational information, not investment advice or a recommendation to trade.