Forex Videos

In this video, you will learn about the double top pattern. You can locate this pattern at the end of an uptrend, hoping for a reversal.

As you can see on the chart, the price is in an uptrend. At some point, the sellers lose steam, and encounters resistance. So, the market forms the first top. So, the market pulls back to look for support. After finding support, it attempts to break the top. This support line is also called as neckline. However, it fails to do so, and then forms the second top.

You should wait for the market to break below the neckline for the confirmation of this pattern. This is your place for your short entry with your stop-loss above the highs. Conservative traders wait for the market to retest of this neckline, and then enter short. By doing this, you can avoid false breakouts.

You can get a better risk to reward ratio and also placing of your stop-loss becomes more precise. The measured objective of a double top pattern is obtained by taking the measurement from the top of this pattern to the neckline and then place it from the point of breakout.