DOUBLE TOP REVERSAL

The DOUBLE TOP REVERSAL is a bearish reversal pattern, there are two consecutive peaks that are roughly equal, with a moderate trough between the two peaks, it gives a signal that at least an intermediate change in trend from bullish to bearish if a key support is broken.

The process of a double top reversal pattern is as follows:

Step 1-Prior trend: Several up bars appear.

Step 2-The first peak: The highest point is created.

Step 3-Trough: A decline takes place, the decline range is about 10-20% as compared to the first peak.

Step 4-The second peak: Price goes up, there is a resistance of the first peak, there are some price testing around the resistance level, we need to reconfirm the resistance level.

Step 5-Decline from the second peak: If a decline from the second peak takes place that means demand is weaker than supply.    

Step 6-Support break: If the price goes down to a support level, the reversal is not complete. If we see the support between the two peaks broken, the double top reversal completes.

Step 7-Support becomes resistance: The broken support now can becomes a potential resistance.