Double top formation

Double top is a rebound formation that is formed in an uptrend. A double top consists of two peaks, the volume in the second top should be lower than the volume in the first top.

A valid double top formation must have some duration between the first and the second peak, two weeks is a common requirement. A horizontal trend line is drawn from the bottom levels of a double top.

The price target for a double top is the distance between the horizontal trend line and the peak level in the second peak counting downward from the horizontal trend line. A sell signal for a double top is given when the horizontal trend line is crossed with decreasing volume.

Double top
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double top, formation, technical analysis