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Double top and double bottom - Wikipedia
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<div id="contentSub"><div id="mw-content-subtitle"></div></div> <div id="mw-content-text" class="mw-body-content"><div class="mw-content-ltr mw-parser-output" lang="en" dir="ltr"><p class="mw-empty-elt"> </p><p><b>Double top and double bottom</b> are reversal <a href="/wiki/Chart_pattern" title="Chart pattern">chart patterns</a> observed in the <a href="/wiki/Technical_analysis" title="Technical analysis">technical analysis</a> of financial trading markets of <a href="/wiki/Stock" title="Stock">stocks</a>, <a href="/wiki/Commodities" class="mw-redirect" title="Commodities">commodities</a>, <a href="/wiki/Currencies" class="mw-redirect" title="Currencies">currencies</a>, and other <a href="/wiki/Assets" class="mw-redirect" title="Assets">assets</a>.<sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-2" class="reference"><a href="#cite_note-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Double_top">Double top</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Double_top_and_double_bottom&action=edit&section=1" title="Edit section: Double top"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:Doubletop_confirmed.jpg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/8/81/Doubletop_confirmed.jpg/300px-Doubletop_confirmed.jpg" decoding="async" width="300" height="206" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/8/81/Doubletop_confirmed.jpg/450px-Doubletop_confirmed.jpg 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/8/81/Doubletop_confirmed.jpg/600px-Doubletop_confirmed.jpg 2x" data-file-width="700" data-file-height="480" /></a><figcaption>Double top confirmation</figcaption></figure> <p>The double top is a frequent <a href="/wiki/Price_formation" class="mw-redirect" title="Price formation">price formation</a> at the end of a <a href="/wiki/Bull_market" class="mw-redirect" title="Bull market">bull market</a>. It appears as two consecutive peaks of approximately the same price on a price-versus-time chart of a market. The two peaks are separated by a minimum in price, a <i>valley</i>. The price level of this minimum is called the neck line of the formation. The formation is completed and confirmed when the price falls below the neck line, indicating that further price decline is imminent or highly likely. </p><p>The double top pattern shows that <a href="/wiki/Demand_and_supply" class="mw-redirect" title="Demand and supply">demand is outpacing supply</a> (buyers predominate) up to the first top, causing prices to rise. The supply-demand balance then reverses; supply outpaces demand (sellers predominate), causing prices to fall. After a price valley, buyers again predominate and prices rise. If <a href="/wiki/Trader_(finance)" title="Trader (finance)">traders</a> see that prices are not pushing past their level at the first top, sellers may again prevail, lowering prices and causing a double top to form. It is generally regarded as a bearish signal if prices drop below the neck line. </p><p>The time between the two peaks is also a determining factor for the existence of a double top pattern. If the tops appear at the same level but are very close in time, then the probability is high that they are part of the consolidation and the trend will resume. </p><p>Volume is another indicator for interpreting this formation. Price reaches the first peak on increased volume then falls down the valley with low volume. Another attempt on the rally up to the second peak should be on a lower volume. </p> <div class="mw-heading mw-heading2"><h2 id="Double_bottom">Double bottom</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Double_top_and_double_bottom&action=edit&section=2" title="Edit section: Double bottom"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:Double_bottom_confirmation.jpg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/5/59/Double_bottom_confirmation.jpg/300px-Double_bottom_confirmation.jpg" decoding="async" width="300" height="210" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/5/59/Double_bottom_confirmation.jpg/450px-Double_bottom_confirmation.jpg 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/5/59/Double_bottom_confirmation.jpg/600px-Double_bottom_confirmation.jpg 2x" data-file-width="700" data-file-height="490" /></a><figcaption>Double bottom confirmation</figcaption></figure> <p>A double bottom is the end formation in a declining market. It is identical to the double top, except for the inverse relationship in price. The pattern is formed by two price <a href="/wiki/Minima" class="mw-redirect" title="Minima">minima</a> separated by local peak defining the neck line. The formation is completed and confirmed when the price rises above the neck line, indicating that further price rise is imminent or highly likely. </p><p>Most of the rules that are associated with double top formation also apply to the double bottom pattern. Volume should show a marked increase on the rally up while prices are flat at the second bottom.<sup class="noprint Inline-Template Template-Fact" style="white-space:nowrap;">[<i><a href="/wiki/Wikipedia:Citation_needed" title="Wikipedia:Citation needed"><span title="This claim needs references to reliable sources. (December 2010)">citation needed</span></a></i>]</sup> </p> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Double_top_and_double_bottom&action=edit&section=3" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist"> <div class="mw-references-wrap"><ol class="references"> <li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon a{background:url("//upload.wikimedia.org/wikipedia/commons/4/4c/Wikisource-logo.svg")right 0.1em center/12px no-repeat}body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-free a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-limited a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-registration a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-subscription a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .cs1-ws-icon a{background-size:contain;padding:0 1em 0 0}.mw-parser-output .cs1-code{color:inherit;background:inherit;border:none;padding:inherit}.mw-parser-output .cs1-hidden-error{display:none;color:var(--color-error,#d33)}.mw-parser-output .cs1-visible-error{color:var(--color-error,#d33)}.mw-parser-output .cs1-maint{display:none;color:#085;margin-left:0.3em}.mw-parser-output .cs1-kern-left{padding-left:0.2em}.mw-parser-output .cs1-kern-right{padding-right:0.2em}.mw-parser-output .citation .mw-selflink{font-weight:inherit}@media screen{.mw-parser-output .cs1-format{font-size:95%}html.skin-theme-clientpref-night .mw-parser-output .cs1-maint{color:#18911f}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .cs1-maint{color:#18911f}}</style><cite class="citation web cs1"><a rel="nofollow" class="external text" href="http://www.investopedia.com/university/charts/charts4.asp">"Double Bottom"</a>. <a href="/wiki/Investopedia.com" class="mw-redirect" title="Investopedia.com">investopedia.com</a><span class="reference-accessdate">. Retrieved <span class="nowrap">30 January</span> 2015</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=unknown&rft.btitle=Double+Bottom&rft.pub=investopedia.com&rft_id=http%3A%2F%2Fwww.investopedia.com%2Funiversity%2Fcharts%2Fcharts4.asp&rfr_id=info%3Asid%2Fen.wikipedia.org%3ADouble+top+and+double+bottom" class="Z3988"></span></span> </li> <li id="cite_note-2"><span class="mw-cite-backlink"><b><a href="#cite_ref-2">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite class="citation web cs1"><a rel="nofollow" class="external text" href="http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:double_bottom_reversal">"Double Bottom Reversal"</a>. <i>Stock Charts</i>. School. 9 June 2014<span class="reference-accessdate">. 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href="/wiki/Market_trend" title="Market trend">Market trend</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Charts</th><td class="navbox-list-with-group navbox-list navbox-even hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Candlestick_chart" title="Candlestick chart">Candlestick</a></li> <li><a href="/wiki/Renko_chart" title="Renko chart">Renko</a></li> <li><a href="/wiki/Kagi_chart" title="Kagi chart">Kagi</a></li> <li><a href="/wiki/Line_chart" title="Line chart">Line</a></li> <li><a href="/wiki/Open-high-low-close_chart" title="Open-high-low-close chart">Open-high-low-close</a></li> <li><a href="/wiki/Point_and_figure_chart" title="Point and figure chart">Point and figure</a></li> <li><a href="/wiki/Line_break_chart" title="Line break chart">Line break</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Patterns</th><td class="navbox-list-with-group navbox-list navbox-odd hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"></div><table class="nowraplinks navbox-subgroup" style="border-spacing:0"><tbody><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Chart_pattern" title="Chart pattern">Chart</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Broadening_top" title="Broadening top">Broadening top</a></li> <li><a href="/wiki/Cup_and_handle" title="Cup and handle">Cup and handle</a></li> <li><a class="mw-selflink selflink">Double top and double bottom</a></li> <li><a href="/wiki/Flag_and_pennant_patterns" title="Flag and pennant patterns">Flag and pennant</a></li> <li><a href="/wiki/Gap_(chart_pattern)" title="Gap (chart pattern)">Gap</a></li> <li><a href="/wiki/Head_and_shoulders_(chart_pattern)" title="Head and shoulders (chart pattern)">Head and shoulders</a></li> <li><a href="/wiki/Island_reversal" title="Island reversal">Island reversal</a></li> <li><a href="/wiki/Price_channels" title="Price channels">Price channels</a></li> <li><a href="/wiki/Triangle_(chart_pattern)" title="Triangle (chart pattern)">Triangle</a></li> <li><a href="/wiki/Triple_top_and_triple_bottom" title="Triple top and triple bottom">Triple top and triple bottom</a></li> <li><a href="/wiki/Wedge_pattern" title="Wedge pattern">Wedge pattern</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Candlestick_pattern" title="Candlestick pattern">Candlestick</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"></div><table class="nowraplinks navbox-subgroup" style="border-spacing:0"><tbody><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Candlestick_pattern#Simple_patterns" title="Candlestick pattern">Simple</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Doji" title="Doji">Doji</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Candlestick_pattern#Complex_patterns" title="Candlestick pattern">Complex</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Hikkake_pattern" title="Hikkake pattern">Hikkake pattern</a></li> <li><a href="/wiki/Morning_star_(candlestick_pattern)" title="Morning star (candlestick pattern)">Morning star</a></li> <li><a href="/wiki/Three_black_crows" title="Three black crows">Three black crows</a></li> <li><a href="/wiki/Three_white_soldiers" title="Three white soldiers">Three white soldiers</a></li></ul> </div></td></tr></tbody></table><div></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Point_and_figure_chart" title="Point and figure chart">Point and figure</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Bull_trap" title="Bull trap">Bull trap</a></li> <li><a href="/wiki/Bear_market" class="mw-redirect" title="Bear market">Bear trap</a></li></ul> </div></td></tr></tbody></table><div></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Technical_indicator" title="Technical indicator">Indicators</a></th><td class="navbox-list-with-group navbox-list navbox-odd hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"></div><table class="nowraplinks navbox-subgroup" style="border-spacing:0"><tbody><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Support_and_resistance" title="Support and resistance">Support &<br />resistance</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Fibonacci_retracement" title="Fibonacci retracement">Fibonacci retracement</a></li> <li><a href="/wiki/Pivot_point_(technical_analysis)" title="Pivot point (technical analysis)">Pivot point</a> (PP)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Market_trend" title="Market trend">Trend</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Average_directional_movement_index" title="Average directional movement index">Average directional index</a> (A.D.X.)</li> <li><a href="/wiki/Commodity_channel_index" title="Commodity channel index">Commodity channel index</a> (CCI)</li> <li><a href="/wiki/Detrended_price_oscillator" title="Detrended price oscillator">Detrended price oscillator</a> (DPO)</li> <li><a href="/wiki/KST_oscillator" title="KST oscillator">Know sure thing oscillator</a> (KST)</li> <li><a href="/wiki/Ichimoku_Kink%C5%8D_Hy%C5%8D" title="Ichimoku Kinkō Hyō">Ichimoku Kinkō Hyō</a></li> <li><a href="/wiki/MACD" title="MACD">Moving average convergence/divergence</a> (MACD)</li> <li><a href="/wiki/Mass_index" title="Mass index">Mass index</a></li> <li><a href="/wiki/Moving_average" title="Moving average">Moving average</a> (MA)</li> <li><a href="/wiki/Parabolic_SAR" title="Parabolic SAR">Parabolic SAR</a> (SAR)</li> <li><a href="/wiki/Smart_money_index" title="Smart money index">Smart money index</a> (SMI)</li> <li><a href="/wiki/Trend_line_(technical_analysis)" title="Trend line (technical analysis)">Trend line</a></li> <li><a href="/wiki/Trix_(technical_analysis)" title="Trix (technical analysis)">Trix</a></li> <li><a href="/wiki/Vortex_indicator" title="Vortex indicator">Vortex indicator</a> (VI)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Momentum_(finance)" title="Momentum (finance)">Momentum</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Money_flow_index" title="Money flow index">Money flow index</a> (MFI)</li> <li><a href="/wiki/Relative_strength_index" title="Relative strength index">Relative strength index</a> (RSI)</li> <li><a href="/wiki/Stochastic_oscillator" title="Stochastic oscillator">Stochastic oscillator</a></li> <li><a href="/wiki/True_strength_index" title="True strength index">True strength index</a> (TSI)</li> <li><a href="/wiki/Ultimate_oscillator" title="Ultimate oscillator">Ultimate oscillator</a></li> <li><a href="/wiki/Williams_%25R" title="Williams %R">Williams %R</a> (%R)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Volume_(finance)" title="Volume (finance)">Volume</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Accumulation/distribution_index" title="Accumulation/distribution index">Accumulation/distribution line</a></li> <li><a href="/wiki/Ease_of_movement" title="Ease of movement">Ease of movement</a> (EMV)</li> <li><a href="/wiki/Force_index" title="Force index">Force index</a> (FI)</li> <li><a href="/wiki/Negative_volume_index" title="Negative volume index">Negative volume index</a> (NVI)</li> <li><a href="/wiki/On-balance_volume" title="On-balance volume">On-balance volume</a> (OBV)</li> <li><a href="/wiki/Put/call_ratio" title="Put/call ratio">Put/call ratio</a> (PCR)</li> <li><a href="/wiki/Volume%E2%80%93price_trend" title="Volume–price trend">Volume–price trend</a> (VPT)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Volatility_(finance)" title="Volatility (finance)">Volatility</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Average_true_range" title="Average true range">Average true range</a> (ATR)</li> <li><a href="/wiki/Bollinger_Bands" title="Bollinger Bands">Bollinger Bands</a> (BB)</li> <li><a href="/wiki/Donchian_channel" title="Donchian channel">Donchian channel</a></li> <li><a href="/wiki/Keltner_channel" title="Keltner channel">Keltner channel</a></li> <li><a href="/wiki/VIX" title="VIX">CBOE Market Volatility Index</a> (VIX)</li> <li><a href="/wiki/Standard_deviation" title="Standard deviation">Standard deviation</a> (σ)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Breadth_of_market" title="Breadth of market">Breadth</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Advance%E2%80%93decline_line" title="Advance–decline line">Advance–decline line</a> (ADL)</li> <li><a href="/wiki/TRIN_(finance)" title="TRIN (finance)">Arms index</a> (TRIN)</li> <li><a href="/wiki/McClellan_oscillator" title="McClellan oscillator">McClellan oscillator</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Other</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Coppock_curve" title="Coppock curve">Coppock curve</a></li> <li><a href="/wiki/Ulcer_index" title="Ulcer index">Ulcer index</a></li></ul> </div></td></tr></tbody></table><div></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Analysts</th><td class="navbox-list-with-group navbox-list navbox-even hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/John_Bollinger" title="John Bollinger">John Bollinger</a></li> <li><a href="/wiki/Ned_Davis_(analyst)" title="Ned Davis (analyst)">Ned Davis</a></li> <li><a href="/wiki/Charles_Dow" title="Charles Dow">Charles Dow</a></li> <li><a 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