what does a double top tell you 
a double top signals a medium or long term trend change in an asset class let s take a look at several historical examples of double tops the chart above is of amazon com inc amzn and shows a double top pattern that formed in the stock between september and october 2018 around a price of 2 050 the important support level in this case formed around 1 880 despite the stock falling nearly 8 from its october peak to support at 1 880 one could not confirm the double top until after the stock fell below 1 880 from that point forward the shares went on to plunge almost 31 further 1in the next example using netflix inc nflx we can see what appears to be the formation of a double top however in this case we see that support is never broken or even tested as the stock continues to rise along an uptrend however later in the chart one can see that the stock again forms what appears to be a double top in june and july but this time it does prove to be a reversal pattern with the price falling below support at 380 resulting in a decline of 39 to 231 in december also notice how the support level at 380 acted as resistance on two occasions in november when the stock was rising 2double top vs double bottomfollowing an uptrend a double top is a bearish reversal pattern that develops it is comprised of two almost equal sized peaks that are close to one another in height separated by a trough a potential trend reversal is indicated by the pattern which shows that the price has reached a resistance level twice but has been unable to break past it this pattern is frequently seen by traders as a signal to sell or enter short positions in anticipation of additional market declines nearly the opposite situation is a double bottom following a downtrend a double bottom is a bullish reversal pattern it consists of a peak in the middle of two almost equal depth troughs that follow one another the pattern indicates that the price found resistance at a particular level and was unable to break below it in many ways a double top looks very similar to a double bottom with the exception of the peaks a double top results in consecutive highs while a double bottom results in consecutive bottoms be mindful that double tops may send false signals even the strongest pattern may break in the opposite direction of its normal path 