Posts Tagged Under: Double Top

Trading Double Tops and Double Bottoms

Double tops and bottoms are patterns that can be drawn in many variations and every trader can potentially interpret them in ways that are applicable to their own style of trading. However, there are certain basic patterns that can help traders establish support and resistance lines more logically versus random drawings.

The three types of double top patterns

Before we get into actual chart studies, we have to address the different types of double tops and what they mean for traders.

The first double top on the far left is the classic double top. This is what you usually see in trading literature or on other trading websites. However, this pattern where you have two swing highs at the same level are rare and trading from a mindset where double tops must look like this can lead to many problems. Also, when you go through a chart you won’t see all the failed

Candlestick patterns serve as a good visual guide for both day traders and swing traders. You can recognize momentum, change of direction (rejection) and/or price confirmation. It usually takes time to recognize these patterns, but with a little bit of training and understanding, you can start seeing them in real time trading.

Single Candle Pattern

As we will see, price action traders separate between 1, 2 and 3 candlestick patterns. The 2 and 3 pattern formations are usually an alternation of the 1 candlestick patterns so it’s important that we start here first.

Generally, 2 and 3 candlestick patterns carry more weight because they offer more context in our opinion.

Yo-Son and In-Sen

We can also call them “momentum” candles because they are typically large candles without long, or any, wicks. In case of a bullish Yo-Sen, it means that price has rallied all the way from the open until the close of the candle