What is double top & bottom patterns?

After a Strong move towards Upwards/Downward market does show a pattern called Double Top/Bottom. It is a Reversal Pattern. Most of the people familiar with this Reversal Pattern but they end up searching for a New system just because they don't know how to use it. Well here i am gonna show you the actual way to trade double Top/Bottom.

First Look at this images which shows the Idea of Double Top and Bottom Patterns.



Two things you have to notice here-

1.The Area Between point 1 and 2.
2.Neckline


By these two images we can elaborate that market does react like this but the question arise that "How to read them?"

RULES OF READING DOUBLE TOP-

1. At point 2 Market should not close above the Previous Highest Close.
2. At point 2 Candle high at least touch the previous Highest Close.
3. Always Look Left.(For Support and Resistance)

Lets see some examples.

Example

In above Figure every condition satisfy that's why it can be called a valid double top setup.

Now the lets look at image below it does look like a double top but it is not a valid setup as per rules.

it is time to learn some double bottom patterns too After that we will take a look at

1. Where to enter in the market based of double top and bottom?
2. Where to Place Stop Loss & Take Profit?
3. Which time Frame is preferable?
4. What will be the Risk to Reward Ratio?

RULES OF READING DOUBLE BOTTOM-

1. At point 2 Market should not close below the Previous lowest Close.
2. At point 2 Candle low at least touch the previous Lowest Close.
3. Always Look Left.

Example:


In this Figure all Condition satisfy for a double bottom.Now you get an idea that how to read double top and bottom patterns.
but does they actually work in real time?

There are many different ways you can trade double top and bottoms, even sometime i do use it for trend continuation too instead of reversal.

How i trade double top and Bottoms Patterns-

1. All condition of double Top/Bottom must Exist.

2. As soon as a opposite candle appear,open a trade after it close. (Price Action)
in double top- i look for a sell candle to form.
in double bottom - i look for a buy candle to form.

3. Risk to reward should be 1:2

Note: Attach RSI(7) to look for Divergence. (Alternative tool, Rare Condition)

Example:

The above example follows all the rules for trading double top. The entry is also confirmed by bearish engulfing pattren

In above scenario all the condition met which lead us to a great entry.

Best Time Frame-

Believe me it works in every time frame just make sure the previous look left structure should not be very old in lower time frames. the lowest time you should pick is 5 minutes chart.
1Hr time frame is ideal and best suited.

NOTE- ALWAYS EXECUTE TRADE WITH 1:2 RISK TO REWARD RATIO.

Trading this pattern is not different from trading support and resistance but we just confirm few things before taking any step in the market,now for better performance and accuracy of this i look for price action too.
the most accurate price action figures work with this system is bearish or bullish engulfing patterns.


Look for the previous examples you will get the idea of trade confirmation and reversal signal based on this engulfing patterns.

The Bottom Line-

Trading a system is not always easy we have to deal with patience, Emotion and Attention. Everybody knows That.
There can be many filters to be applied here but that make it more rare. this is not the only way to trade double top and bottom pattern, the style of trading changes with person to person. so if you like it give it a thumbs up and share your thoughts below.
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