Twin peaks return… here’s a chart, a real life example.

The price has reached a level of resistance, bounced back off it… and then returned to test the idea one more time for luck… It didn’t work and now there’s a pronounced downtrend forming.

This is the double top, and, as usual, what holds true for the double top will also be so in reverse for the double bottom, which is even less polite.

The neckline is the level of the low between the two peaks. You’ll be looking to place a trade when the price breaks the neckline again…

Notes:
It’s relatively common for the second peak to fall short of the level reached by the first peak – another sign perhaps that the downtrend is on its way.

Double tops can sometimes turn into triple tops, or a head and shoulders – as always, however much analysis you do, it won’t always turn out the way you thought/wanted…

Important: this is a characteristic trend reversal pattern – so there has to have been a significant trend before… if not – and you see the occasional instance of this, even in charting books and certainly on some web page explanations – what they’re trying to make a trend reversal pattern out of is probably just noise.