How To Trade Double Top Pattern

A thread on how to trade double top pattern

So what is a double top pattern: It is a popular chart formation that traders use to identify potential reversal points in the market. It is a bearish pattern that occurs when the price of an asset reaches a certain level, retraces and then rallies again to the same level before reversing downwards.

In this thread, I will outline a step-by-step guide on how to trade the double top pattern.

Step 1: Identify the double top pattern

This is done by looking for two peaks in the price action that are likely equal in height, with a big low or let me say valley in between them. The peaks should be formed at roughly the same level, and the valley between them should be at least 10-20% below the peaks.

Step 2: Wait for confirmation

Once the double top pattern has been identified, it is important to wait for confirmation before entering a trade. This confirmation can come in when that market moves back to retest the last resistance zone before going in the bearish directions.

Step 3: how to know a valid double top pattern

Although from my introduction and step 1 guide you should know how to spot it
But to have an 85% assurance that its valid then you should look out for the following.
*Two peaks or two highs that are evenly equal
*a single low between them or valley.
*the market volumes: when the second peak is forming, it should be accompanied by lower volume than the first peak. This indicates that there is less buying pressure and that the buyers may be losing momentum.
*confirmation from HTF (higher timeframe) like the 30min to 1hr tf as it hold strong on this tf than the 1min to 5min tf.

Step 4: how to place your entry
After marking out your poi (point of interest) you place your sell order below your poi which is also your resistance zone.

So from there you can monitor your trade or choose to leave just the move of the market doesn't mess with your psychology.
And in conclusion, the double top pattern is a popular chart formation that traders use to identify potential reversal points in the market. By following the steps outlined in this thread, traders can successfully trade the double top pattern and potentially profit from market reversals