Formations Double Top and Double Bottom

These formations, after of the formations Shoulder-Head-Shoulder, occur more frequently. They are highly reliable formations and indicate a change in trend. The Double Top patterns by the figure that they draw are identified with a M and a W for Double Bottom patterns.

These formations are characterized by the creation of two maximums or minimums of a similar height and shape to obtain the target equals the patterns of S-H-S

Double Top (M)

This pattern appears at the end of uptrends and involves the creation of two maximums made by the price, which will function as a resistance. In Figure A-3-1 shows the maximum A and C have similar heights, the point B is the minimum that separates the maximums and is the Neckline or support, which when is broken complete the formation. The goal to achieve (line X) is measured from the maximums A and C to the minimum B, then there is projected just later that the Neckeline or support is broken.

Figure A-3-1 

 

In Graph A-3-1 shows the prices of the pair GBP/USD in timing of 4 hours, in this one shows how the price makes the maximums A and C of equal value, becoming a strong resistance this level, when the price break your minimum B at point D, the price drops to achieve the objective of price.

Graph A-3-1

Double Bottom (W)

This pattern is an accurate reflection of Double Top patterns and all the beginning of this one is applied of reversed form. Example: The pattern W is formed in downtrends and its formation is the creation of two minima of a similar decline (Figure A-3-2).

 Figure A-3-2

In Graph A-3-2 shows the prices of the pair GBP/USD in timing of 4 hours, this one shows how the price makes the minimums A and C of equal value when the price exceeds its maximum B at point D, the price makes pullback. Note how the level the maximum B becomes a resistance to a support.

 Graph A-3-2

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Erick Gálvez

Administrador at ASD Forex
Webmaster of ASDForex.com and trader of forex market since 2008. I'm in charge of the publication and editing of news and analysis www.asdforex.com

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