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.

RELATED TERMS
  1. Double Bottom

    A charting pattern used in technical analysis. It describes the ...
  2. Pattern

    In technical analysis, the distinctive formation created by the ...
  3. Double Top

    A term used in technical analysis to describe the rise of a stock, ...
  4. Diamond Top Formation

    A technical analysis reversal pattern that is used to signal ...
  5. Double Up

    An investing strategy in which a trader doubles his or her current ...
  6. Rising Bottom

    A pattern on a security's chart that results from the daily low ...
Related Articles
  1. Trading

    Analyzing Chart Patterns: Double Top And Double Bottom

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The double top and double bottom are another pair of well-known chart patterns whose names don't leave much to the imagination. ...
  2. Trading

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  3. Trading

    Introduction To Technical Analysis Price Patterns

    To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.
  4. Trading

    Analyzing Chart Patterns: Conclusion

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com This introduction to chart patterns has provided a broad overview of chart pattern analysis and several of the largest patterns. ...
  5. Trading

    Analyzing Chart Patterns: Round Bottoms

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com A rounding bottom, also referred to as a saucer bottom, is a long-term reversal pattern that signals a shift from a downtrend ...
  6. Trading

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  7. Trading

    Using Double Tops And Double Bottoms In Currency Trading

    Find out how to apply the two most common price reversal patterns to your trading.
  8. Trading

    Analyzing Chart Patterns: Why Charts?

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com Before the advent of computers and data feeds, the use of charts to formulate trading strategies was outside the mainstream ...
  9. Trading

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
  10. Trading

    Trading Double Tops And Double Bottoms

    We look at how Bollinger Bands help accurately project entry and exit points for pattern traders.
RELATED FAQS
  1. What are the main differences between a double top and a double bottom?

    Identify double tops and double bottoms, and learn what each could mean for the security's current price trend. Discover ... Read Answer >>
  2. How effective are double tops in spotting a change in the overall trend?

    Learn about the double top price chart pattern, a commonly appearing indicator used to establish resistance levels and possible ... Read Answer >>
  3. How effective are double bottoms in spotting a change in direction of the overall ...

    Learn more about the double bottom price chart pattern, a commonly bullish reversal indicator that can also be used to establish ... Read Answer >>
  4. What does a double top tell a trader about the overall trend?

    Find out what technical chartists mean by a double top trend in a security's price movements, and learn why double tops are ... Read Answer >>
  5. What are common trading strategies when identifying a double top

    Learn strategies traders use when a double top pattern is spotted. This pattern is common and can be profitable in the equity ... Read Answer >>
  6. What is a common price target when identifying a double bottom?

    Learn how to identify a double bottom stock pattern and where to set a target selling price point to get the most out of ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center