Definition
A double top is two peaks at about the same price with a dip between them. A double bottom is the reverse: two dips at about the same level.
The story
Price rallies to $50, falls back, rallies to $50 again and stalls. That second failure at the same spot is what gives a double top its name. Some traders read it as a sign buyers couldn't push past that level, and many only treat it as confirmed once price falls below the dip between the two peaks; a double bottom is read the opposite way. Like every pattern, it doesn't always play out.
Why you'll see it
It's one of the most commonly named chart patterns.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms