Reversal Chart Pattern

What is a double top pattern in trading?

A double top is two peaks at roughly the same level with a pullback between them, read as a sign buyers failed to push through the same resistance twice. Here is how to identify one, how it is typically traded, and what it does not tell you.

What it is

Two peaks at a similar level, with a pullback between them

A double top forms when price rallies to a resistance level, pulls back, rallies again to roughly the same level, and fails to push meaningfully higher a second time. The low of the pullback between the two peaks is called the confirmation line (sometimes the neckline). The pattern reads as two failed attempts at the same level rather than one, which is why it carries more weight than a single failed breakout.

01
Look for a prior uptrend into the first peak
As with any reversal pattern, a double top only means something if there was a trend to reverse. Two peaks inside a range that was never trending are not read the same way.
02
Allow a margin around the two peak levels
The two peaks rarely land at the exact same price. A small difference — the pattern still holding if the second peak is a little higher or lower — is normal and does not disqualify it on its own.
03
Mark the pullback low between the peaks
This is the confirmation line. It is the level price needs to close below for the pattern to be considered active, the same role the neckline plays in a head and shoulders.
04
Wait for a close below the confirmation line
Two peaks at a similar level with nothing else happening is just resistance holding twice — it is not yet a confirmed reversal. The close below the pullback low is what separates the pattern from an ordinary range top.

How it's traded

The confirmation-line break is the mechanical trigger

The common approach enters on, or shortly after, a close below the confirmation line rather than at the second peak itself, since price failing to make a new high is not the same as price actually reversing. A stop is typically placed above the higher of the two peaks, because a move back above both peaks means the double top failed to hold. A frequently used target measures the distance from the peaks down to the confirmation line and projects that same distance downward from the break, the same measured-move logic used on a head and shoulders.

Common mistakes

Treating the second peak alone as the signal

The most common mistake is selling as soon as price stalls near the first peak's level, without waiting for the confirmation-line break — a stall at resistance is common and most of them are not double tops. A second is requiring the two peaks to match exactly and dismissing a valid pattern because the second peak was a few ticks higher or lower. A third is ignoring how far apart in time the two peaks formed — two peaks separated by only a handful of bars behave differently from two that formed weeks apart, and lumping every spacing into one rule tends to produce worse reads than treating them separately.

Limits

What a double top does not tell you

It does not tell you how far the move down will run — the measured-move target is a rule of thumb, and plenty of double tops break the confirmation line and then chop sideways rather than delivering the full projected move. It does not tell you whether the break is genuine or a shakeout, since price re-entering the range above the confirmation line after a brief break happens often enough that some traders require a retest before acting. And because two peaks at a similar level occur constantly on smaller timeframes without any follow-through, the pattern is far noisier intraday than it looks on the daily chart examples used to teach it.

Test the double top rule before you trade it

Spotting two peaks on a chart you already know the outcome of proves nothing. Traders Journal's backtesting steps through price history bar by bar, so you can mark every confirmation-line break the pattern actually produced and record what happened next — including the failed ones.