What it looks like
A rise to a high, a dip to a swing low, then a second rise that stops at about the same price as the first high, making an M shape. The low of the dip is the neckline. The pattern completes when a candle closes below it. The height is the distance from the highs down to the neckline.
What it means
Buyers pushed to the same area twice and sellers held them back both times. When price closes below the dip low, the sellers' defence has worked and the run of higher lows is broken. It marks the point where a stalled rise becomes a confirmed turn down.
How to trade it
- 1
Mark both highs and the dip low between them (the neckline).
- 2
Confirmation: a candle closes below the neckline.
- 3
Entry: sell the break, or a retest where price comes back up to the neckline and fails.
- 4
Stop: above the two highs. Example on US30: highs at 47,400 and 47,395, neckline 47,150. Sell a retest at 47,145, stop at 47,420, a 275 point risk.
- 5
Target: the pattern height (250 points) below the neckline, about 46,900.
A close back above the neckline, the level that broke.
Where it works best
After an extended rise into resistance on the 1 hour to daily charts, where the second high fails at the same level as the first.
WickSpeak finds double tops automatically and labels them on the candles that made them. Each note says what the pattern is, how to trade it and that a close back above the neckline proves it wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Selling at the second high before the neckline breaks.
- Placing the stop just above the neckline, where a normal retest takes it out.
- Ignoring that equal highs often get swept, so the second high may poke slightly above the first.
Related patterns
Questions traders ask
How reliable is a double top?
It is one of the best known reversal patterns, but it fails often enough that the confirmation close and a stop above the highs matter. We do not quote a win rate; test it on your own market and timeframe.
When is a double top confirmed?
When a candle closes below the low of the dip between the two highs. Until then the market may simply be ranging.
What is the double top target?
The usual target is the height from the highs to the neckline, measured down from the break.
Can the second top be slightly higher?
Yes. The highs only need to be about the same price, and the second often pokes a little above the first as it sweeps stops before turning.