Market lesson · Market lessons
Double top at all-time highs
Two failures at the same high signal supply.
A double top forms when price reaches a high, pulls back, returns to the same level, and fails again. The first high attracted sellers. The second attempt found the same sellers still there.
TOP 1, TOP 2, and the NECKLINE.
Both peaks are near the same level. The pattern confirms only when price breaks below the NECKLINE, which is the low between TOP 1 and TOP 2.
A stock hits $200, pulls back to $185, rallies back to $200 on lower volume, and stalls. What confirms a double top has formed?
Show the answer
C. Price closes below the $185 neckline. Until the neckline breaks, the pattern has not confirmed. Lower volume on the second peak is a warning sign, not the confirmation.