Double Top Definition
Double Top is a chart pattern with two swing highs very close in price. This pattern can be seen in all time-frames. There are a few requirements to classify a chart pattern as a double top:
1. Two peaks that are near equal in price
2. Equal distance in terms of time between highs
3. Volume decreases on the second top
Double tops have an enormous amount of "cause" or breakout potential as the price of the stock has moved back in forth within a defined range. So, when the stock finally breaks out, there is an expansion in volume and price movement. Breakouts can occur to both the upside and downside. If you enter a breakout of a double top chart pattern, you will want to keep a close stop above/below the support and resistance level.
Double Top Price Target
When a stock breaks out of a double top formation, the price target is the range of the formation added to the breakout level.
0 comments:
Post a Comment