Double Tops and Bottoms
A double top describes two local highs near a similar area separated by a pullback; a double bottom reverses that shape. The pattern is incomplete until its predefined confirmation condition occurs.
How it works
Define how close the two extremes must be, the minimum separation and whether the intervening swing must break on a close. Confirmed pivot definitions introduce a delay. Calling every pair of peaks a reversal after the fact creates a pattern that cannot be tested prospectively.
Worked example
Peaks form at 100 and 101 with an intervening low at 94. A rule allowing peaks within 2% can label a candidate double top. If confirmation requires a close below 94, a trade at 93.8 followed by a close at 95 does not qualify. A later close at 93.5 does. A conventional projected height of roughly 6–7 is only a heuristic, not a promised target.
Amounts, prices and scenarios are fictional teaching examples. They exclude any effects not explicitly stated and are not trade recommendations.
Limits and common mistakes
The second peak may precede a continuation to new highs. Retrospective swing selection and switching between wicks and closes inflate apparent success. Gaps can cross an invalidation level without offering a fill there.
Knowledge check
When can a candidate pattern be called confirmed under a close rule?
Read the explanation
Only after the relevant bar closes beyond the predefined intervening swing level. A wick alone is insufficient under that particular rule.
References and further reading
These sources explain the underlying concepts and specifications. They do not endorse QBMFX Academy. Check the relevant market, protocol version and reporting rules before applying an example.