Doubles can be bullish or bearish reversal chart patterns that traders use in technical analysis. They are divided into two patterns. Double Tops, and Double Bottoms.
Doubles Metaphor
This is a picture of a double. They are hugging. What does this have to do with forex chart patterns? A lot! It helps you visualize the pattern and remember it more easily.
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Bearish Reversal Doubles – Double Tops
A double top is the formation of a pattern that looks like the letter M or the heads of twin babies hugging. After a period of an uptrend, the pattern is formed by two consecutive peaks that are almost equal to each other, with a “valley” in between. This usually means that the pair has finished moving up and that now we could be expecting its price to go down.
Bearish Reversal Doubles – Double Tops
After a double top pattern is completed, the previous support level that was broken will often act as a resistance level. You see, everything we’ve been learning is coming together.
And the even better news is that by practicing on free demo accounts, you will be able to identify all these patterns in less than a second. Here is another story of a double-top. Next story should be written by you on the Invest Diva’s discussion group.
Bullish Reversal Doubles – Double Bottoms
A double bottom pattern is the mirror image of the double top pattern. It looks like the letter “W” or the tushies of twin babies hugging. It happens when the pair is in a strong downtrend, followed by two consecutive valleys that are approximately equal to each other,with a peak in between.
Bullish Reversal Doubles – Double Bottoms
Just as with the double top pattern, we should pay close attention to whether or not the pattern has been confirmed by a subsequent break of resistance (the neckline). After seeing that, along with other points of the IDDA approach to strategy development, we could place a bullish entry order (buy order) above the neckline and enjoy the ride up. Just to be safe, we usually set our limit order a little below the same distance as that between the bottom and the neckline.
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Other Doubles can include twin puppies or cats.
It is important to remember that on a chart, a double top and a double bottom never happen at the same time. You can find either the shape of a double top or that of a double bottom. The two have exactly opposite interpretations.
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Related:
- Triple Top Triple Bottom – Reversal Patterns.
- Head and Shoulders – Reversal Patterns.
- Saucers – Reversal Chart Patterns.
- Ichimoku Kinko Hyo- What’s Best Time Frame to Use it?
- Rectangles – Technical Chart Patterns.
- Bullish Reversal Candle Arrangements.
- Forex Patterns – Basics of Technical Charting.
- Triangles – Technical Chart Patterns.
- Continuation Patterns List.
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