What is Double Top Bullish?

• Rukayia Sultana Nishat
• 26 Oct, 2022

t's possible that you've heard a trader or analyst refer to themselves as "bullish" on a stock, a market segment, or the economy in general, and it perplexes you. When bull markets are coming to a close, double tops are a frequent price formation.

Simply expressed, being "bullish" indicates that the investor expects the price of a stock or the market as a whole to rise. On the other hand, investors who think a stock will decline or underperform are said to be "bearish." Bullish investors are frequently referred to as bulls, while investors who are bearish as bears. Bullish, however, can have a variety of meanings, particularly for short- and long-term traders.

Double Top: What Is It?

Double tops are a common price formation at the end of bull markets. A market price-versus-time chart shows two successive peaks at the same price. A valley separates the peaks. The formation's neckline is this minimum price. When the price falls below the neck line, the pattern is complete and suggests that prices will go down even more.

Up to the first top, the double top pattern shows buyers outnumber sellers, raising prices. After that, sellers outnumber buyers, lowering prices. Buyers return and prices climb. Sellers may drop prices and establish a double top if traders notice that prices are not rising past the first top. Prices below the neck line are bearish.

A double top pattern depends on the time between peaks. If the tops are at the same level and close in time, they are likely to consolidate and the trend will restart.

Volume helps comprehend its formation. Price rises on volume and lowers on low volume. A lower-volume rally to the second peak is recommended.

Is Double Top Bullish?

A double top is a weak technical reversal pattern that happens when an asset's price goes up twice in a row and then goes down a little bit. It is confirmed when the asset's price goes below a support level equal to the low between the previous two highs.

Traders regularly take advantage of major patterns in technical analysis, such as double tops and bottoms. A double top takes the form of the letter 'M' and is indicative of a bearish reversal in the trend. The formation of a double bottom, which looks like the letter 'W', is indicative of a price movement that is likely to be bullish.

Regarding double tops and bullish trading, there are a lot more things to learn.