This pattern is one of the most common price reversal patterns.
Double Top Pattern
The double top pattern is complete when price breaks below the previous swing low of the first high, and is considered successful when price moves at least the same distance of the previous swing low.
Double Bottom Pattern
The double bottom pattern is complete when price breaks above the previous swing high of the first low, and is considered successful when price moves at least the same distance of the previous swing high.
When you recognize double top or bottom pattern, you can either A enter at market price once the breakout occurs or B set a pending order.
In the example below, you see a double top pattern. The second trend line is the previous swing low and the pending order would be set just below for a short position.
Trail Stopping & Risk To Reward
After you have decided whether you will be entering at market price or setting pending orders, you must have a trading plan in place for take profit levels and solid risk management.
See you then!