What is a Double Top Pattern?
A Double Top is a bearish reversal pattern that forms when price tests the same resistance level twice, fails both times, then breaks below the swing low between the two peaks (the neckline).
What Does a Double Top Pattern Indicate?
A Double Top shows buyers exhausted demand at resistance and sellers took control. The second rejection shows supply defending the highs. Once the neckline breaks, trapped longs exit and fresh shorts enter, accelerating the move lower.
Is the Double Top Pattern Bullish or Bearish?
Bearish. The pattern signals a trend reversal from uptrend to downtrend, but only after a confirmed close below the neckline. Wait for the close before entering.
How to Identify a Double Top Pattern?
You need three things on the chart: two swing highs at roughly the same price, a clear trough between them that defines the neckline, and a candle close below that trough. Miss any one and the pattern doesn't qualify.
Prior uptrend leading into the first peak
Two peaks near the same resistance zone, separated by a clean pullback
One obvious swing low between peaks (your neckline)
Confirmation: a candle close below the neckline — not just an intrabar wick
How to Draw a Double Top Pattern?
Mark the two swing highs, draw a horizontal line across the lowest point between them, and extend it to the right. That horizontal line is your neckline and the trigger level for the trade.
Circle the first swing high and the second swing high near the same price.
Find the lowest point of the pullback between them.
Draw a horizontal neckline through that trough (use the cluster of closes and wicks that best matches the level).
Extend the neckline forward to watch for the breakdown and any retest.
How to Trade a Double Top Pattern?
Wait for a confirmed close below the neckline, then short either the breakdown candle or the first retest that holds the neckline as resistance. Both entries work with different risk/reward profiles. Choose one and apply it consistently.
Breakdown entry: short on a daily close below the neckline.
Retest entry: after the break, short the first pullback into the neckline when price rejects it.
Confirmation filter: prefer a breakdown with volume above the 20-day average and a strong bearish close that finishes near the low.
What is the Profit Target for a Double Top Pattern?
The profit target is a measured move equal to the pattern height (peak to neckline) projected down from the breakdown point.
Formula: Target = Neckline − (Peak − Neckline)
Example: Peaks at $100, neckline at $90, height = $10, target = $80.
Where to Put a Stop Loss on a Double Top Pattern?
Your stop goes above the second peak for the safer structural stop, or just above the neckline after a retest entry for a tighter invalidation point.
Conservative stop: a few ticks above the second peak (the most recent swing high).
Tighter stop: above the neckline after a failed retest (use the retest swing high as your reference).
What Happens After a Double Top Pattern?
After the breakdown, price often accelerates lower, then comes back to retest the neckline from underneath. From there, two outcomes are possible: continuation lower (the textbook play), or a reclaim that traps shorts who chased the break. Watch the retest; the pattern confirms or fails there.
Throwback/retest: the neckline flips from support to resistance and gets retested within a few candles to a few weeks.
Follow-through: the continuation lower usually comes after the retest fails.
Failure mode: price snaps back above the neckline and holds, trapping shorts and invalidating the breakdown.
What are the Different Types of Double Top Patterns?
Three main variants, all defined by how the second peak prints relative to the first.
Equal-high Double Top: both peaks print at nearly the same resistance level — the textbook version.
Lower-high Double Top: the second peak fails earlier, showing weaker demand before the neckline breaks.
Complex Double Top: more than two tests of the resistance zone before the neckline gives way.