Close Menu
News HubNews Hub
  • Home
  • General News
  • Breaking News
  • Trending
  • Business
  • Entertainment
  • Politics
  • Health
  • Celebrities
  • Economy
  • Sports
Trending Now

NIS Director Noordin Haji and Speaker Moses Wetangula Among 105 Lawyers Seeking Senior Counsel Title

October 9, 2025

KUCCPS Issues Directive to Universities and Colleges Ahead of KCSE Exams

October 9, 2025

Residents Flee, Businesses Closed as Boda Boda Riders Clash

October 9, 2025

Babu Owino’s Message to Gachagua and Opposition Leaders Ahead of 2027

October 9, 2025

Kenyatta University Hospital Clarifies Reports of Mass Recruitment at the Facility

October 9, 2025

Obinna Takes Action After Accusations of Causing Shalkido’s Death

October 9, 2025

Kenyans to Start Earning Money for Watching Social Media Ads – Itumbi

October 9, 2025

Court Frees Man Found Trespassing Parliament, Claims to Be President Ruto’s Son

October 9, 2025

Government Clarifies CBA Stalemate as Lecturers’ Strike Intensifies

October 8, 2025

Panic as 33-Seater Bus Plunges Into River Along Waiyaki Way at Waruku

October 7, 2025
Facebook X (Twitter) Instagram
Facebook X (Twitter) Instagram
News HubNews Hub
WhatsApp Facebook Advertise With Us
  • Home
  • General News
  • Breaking News
  • Trending
  • Business
  • Entertainment
  • Politics
  • Health
  • Celebrities
  • Economy
  • Sports
News HubNews Hub
Finance

How to Trade Double Tops and Double Bottoms

Judith MwauraBy Judith MwauraFebruary 18, 2025No Comments4 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email
Share
Facebook Twitter LinkedIn Pinterest Email

When a double top or double bottom pattern appears on a chart, it signals the beginning of a trend reversal.

In this guide, we’ll explain how to spot these chart patterns and trade them effectively.

Double Top Pattern

A double top is a reversal pattern that occurs after a strong upward movement in the market. It is formed when the price reaches a certain level, creates a peak, and then fails to break past that same level.

Here’s how it works:

  1. The price rises and reaches a peak or “top.”
  2. After hitting this peak, the price drops slightly but eventually rises again to test that same level.
  3. If the price hits the same level a second time and fails to break above it, then a double top has formed.

Identifying the Double Top on a Chart

In the example chart above, you can see two distinct peaks or “tops” formed after a sharp upward movement. Notice that the second peak didn’t manage to surpass the high of the first peak. This is a strong indication that the upward momentum is running out, suggesting that a reversal is about to happen.

Once a double top is formed, the ideal time to enter a trade is when the price breaks below the neckline (the level connecting the lowest points between the two peaks). This breakout signals that the uptrend is reversing and the price is likely to move lower.

Breakdown of the Double Top

Once the price breaks through the neckline, we often see a significant downward move, confirming the reversal. If we look closely at the chart, we notice that the drop after the neckline break is roughly equal in size to the height of the double top formation. This is helpful when setting profit targets because it suggests how far the price might fall.

Remember, double tops are trend reversal patterns, and they usually appear after a strong uptrend. The drop following the formation often mirrors the size of the double top, so keep this in mind as you set your profit expectations.

Double Bottom Pattern

The double bottom is another trend reversal formation, but this time, we are looking for an opportunity to go long (buy) instead of short (sell). The double bottom pattern typically occurs after an extended downtrend, signaling that the selling pressure is losing momentum.

Here’s how it works:

  1. After a prolonged downtrend, the price forms two valleys or “bottoms” because it can’t break below a certain level.
  2. The second bottom is unable to drop significantly lower than the first bottom.
  3. This shows that the selling pressure is nearly finished, and a trend reversal is imminent.

Identifying the Double Bottom on a Chart

In the example above, you can see two valleys, or “bottoms,” created by the price after a downtrend. The second bottom doesn’t break below the first, indicating that the bears (sellers) are losing control. This signals that a bullish reversal is on the way, and it’s a good time to enter a long position (buy).

Just like with the double top, the formation of a double bottom marks the end of a downtrend. The price usually moves up after the second bottom is formed, and traders can look to profit from the reversal.

In both the double top and double bottom patterns, the key takeaway is that these formations signal a shift in market sentiment—either from bullish to bearish or bearish to bullish. Recognizing these patterns early on can help you make informed trading decisions, entering positions at the right time for maximum profit.

Join Youths official Whatsapp Channel To Stay Updated On time the ongoing situation https://whatsapp.com/channel/0029VaWT5gSGufImU8R0DO30

Follow on WhatsApp Follow on Facebook
Share. WhatsApp Facebook Twitter LinkedIn Email Copy Link
Avatar photo
Judith Mwaura
  • Website

Judith Mwaura is a dedicated journalist specializing in current affairs and breaking news. She is passionate about delivering accurate, timely, and well-researched stories on politics, business, and social issues. Her commitment to journalism ensures readers stay informed with engaging and impactful news.

Related Posts

Kenyans to Start Earning Money for Watching Social Media Ads – Itumbi

October 9, 2025

Trade Wins Kenya Aims to Secure at the COMESA Summit

October 7, 2025

Kenya’s Public Debt Crosses Ksh 11 Trillion as Government Spends Ksh 4.71 Billion Daily on Repayment

October 7, 2025

Govt Announces Date for Free Entry Into National Parks, Reserves

September 23, 2025

Company Puts 41 Cars on Auction Starting at Ksh131,000

September 23, 2025

CS John Mbadi Explains What He Has Done for Kenyans Since His Appointment

September 22, 2025
Leave A Reply Cancel Reply

Recent News

NIS Director Noordin Haji and Speaker Moses Wetangula Among 105 Lawyers Seeking Senior Counsel Title

October 9, 2025

KUCCPS Issues Directive to Universities and Colleges Ahead of KCSE Exams

October 9, 2025

Residents Flee, Businesses Closed as Boda Boda Riders Clash

October 9, 2025

Babu Owino’s Message to Gachagua and Opposition Leaders Ahead of 2027

October 9, 2025

Kenyatta University Hospital Clarifies Reports of Mass Recruitment at the Facility

October 9, 2025

Obinna Takes Action After Accusations of Causing Shalkido’s Death

October 9, 2025

Kenyans to Start Earning Money for Watching Social Media Ads – Itumbi

October 9, 2025

Court Frees Man Found Trespassing Parliament, Claims to Be President Ruto’s Son

October 9, 2025

Government Clarifies CBA Stalemate as Lecturers’ Strike Intensifies

October 8, 2025

Panic as 33-Seater Bus Plunges Into River Along Waiyaki Way at Waruku

October 7, 2025
Popular News

The Clever and Funny Plan That Helped Moi Stay in Power in 1992

April 29, 2025

Former Governor Oparanya Addresses Viral Photos with Mystery Woman

April 29, 2024

Police Officers Moved After Youths Set Mawego Police Station on Fire

July 5, 2025

Aftermath of University of Nairobi’s Night Fire Tragedy [PHOTOS]

January 16, 2025

Should You Use a Personal Loan to Pay Rent?

June 25, 2025

19-Year-Old Suspected Serial Killer Confess to Killing Three Including a Child

August 19, 2024

DeFi vs. CeFi Loans: Which Offers Better Returns?

March 3, 2025

Gachagua Warns Mt Kenya Residents Ahead of Ruto’s Visit

March 29, 2025

How the Government Plans to Fight Gambling Addiction in Kenya

April 23, 2025

How Layer 2 Solutions Are Revolutionizing Crypto Transactions

February 8, 2025
Facebook X (Twitter) Instagram Pinterest
  • Home
  • General News
  • Trending News
  • Advertise With Us
  • About Us
  • Contact Us
  • Privacy Policy
© 2025 News Hub. Designed by News Hub.

Type above and press Enter to search. Press Esc to cancel.