Double Top And Bottom

DEFINITION of 'Double Top And Bottom'

Chart patterns in which the quote for the underlying investment moves in a similar pattern to the letter "W" (double bottom) or "M" (double top). Double top and bottom analysis is used in technical analysis to explain movements in a security or other investment, and can be used as part of a trading strategy to exploit recurring patterns.

BREAKING DOWN 'Double Top And Bottom'

Double top and bottom patterns typically evolve over a longer period of time than a day, and do not always present an ideal visual of a pattern because the shifts in prices don't necessarily resemble a clear "M" or "W". When reviewing the chart pattern, it is important for investors to note that the peaks and troughs do not have to reach the same points in order for the "M" or "W" pattern to appear.