Double Top Chart Pattern Trading Strategy: (Backtest & Example Analysis)
The double top chart pattern trading strategy is a price action formation that consists of two swing highs that end around the same level. It is a reversal chart pattern seen at the end of an uptrend or a prolonged pullback in a downtrend. When completed, the pattern indicates that the price is likely to turn and head downwards.
Here are the suggested trading rules for the double top pattern:
There must be an existing uptrend before the pattern appears
Both swing highs should be within 3% of each other
The price must break below the neckline on a huge volume
We summarized Bulkowski’s findings about the double top pattern in the table below.
You can find more info about this trading strategy here:
https://www.quantifiedstrategies.com/double-top-strategy/