The Double Top is a bearish reversal chart pattern where price tests the same resistance level twice and fails to break through on both attempts. The two peaks form at approximately equal price levels, separated by a moderate pullback. The support level connecting the trough between the peaks is called the neckline. A confirmed close below the neckline triggers the bearish signal.

How to Identify

• Forms after a sustained uptrend — requires prior bullish momentum
• First peak: price reaches a resistance level with relatively strong volume
• Pullback: price retreats 8–15% from the first peak to the neckline (trough)
• Second peak: price rallies back near the first peak on notably lower volume
• Second peak is often slightly lower than the first — a key sign of weakening momentum
• Neckline: horizontal support drawn at the trough between the two peaks
• Confirmed by a close below the neckline; price target equals the peak-to-neckline distance projected downward
• Time between peaks typically spans 3–8 weeks on daily charts

Market Psychology

At the first peak, sellers win the battle at resistance. Buyers regroup and drive price back up — but on the second attempt, buying volume is weaker. The resistance level now has a second layer of supply from traders who bought the first peak and are relieved to sell at break-even.

When the neckline support breaks, long positions with stop-losses below that level are automatically triggered. The resulting cascade of sell orders can accelerate the decline well below the initial target.