Double Top / Bottom Reversal

Setup

Setup criteria:

1. Two peaks at roughly the same level (for a Double Top) or two troughs at the same level (Double Bottom). Some 10-20 pip variance is fine.

2. A meaningful valley between (for tops) or peak between (for bottoms). The deeper the valley relative to the peaks, the more decisive the pattern.

3. Prior trend: Double Top forms after an uptrend; Double Bottom after a downtrend. In mid-range, the pattern is meaningless.

Entry rules

Entry rules:

Confirmation entry: Enter short on a candle close below the valley low (for Double Top) or long on close above the peak high (Double Bottom).

Retest entry: After the neckline breaks, wait for a retest of the broken neckline. Enter on the rejection. Tighter stop just above (or below) the neckline.

Skip if: The two peaks differ by more than 30-40 pips (loose pattern), or the breakout candle is small / on weak volume.

Trade management

Trade management:

Stop loss: Above the higher of the two peaks (for shorts) or below the lower of the two troughs (for longs), plus a buffer.

Target: Measured from the neckline — the vertical distance from the peaks to the valley, projected from the neckline break. A 100-pip peak-to-valley depth targets 100 pips below the neckline as the first milestone.

Trail: Partial close at 1:1, trail the rest. Or hold to the projected target.

Pros and cons

Pros: Simplest classic reversal pattern. Clear entry, stop, and measured target. Works on any liquid pair, any timeframe 1H and above. Widely watched (self-fulfilling).

Cons: Triple-tops (third peak fails) happen often enough to derail premature shorts. The pattern needs to form at major levels for highest conviction. False breakdowns from the neckline happen ~30% of the time.

Best pairs: Any liquid major. More context in the forex glossary, or see strategies stacked on real charts in the trading blog.

Double Top / Bottom Reversal FAQ