Double Top and Double Bottom Patterns: How to Read Them

Where this page's information comes from

• StockCharts' ChartSchool, its guides to the double top and double bottom reversal, for the conventions on anatomy, confirmation, volume, retests and targets. Those points are attributed in the text.
• Thomas Bulkowski's glossary on ThePatternSite, for his definitions of pullbacks, throwbacks, the measure rule and busted patterns.
• TradingLoot's own explanations and diagrams. They describe how the patterns are commonly read, not rules that guarantee an outcome.

This page gives no success rates or performance statistics, and it leaves out the numerical rules of thumb some sources use for spacing and size. For how Bulkowski measured these patterns, see our summary of his encyclopedia.

Anatomy of a double top

It starts with the trend. ChartSchool looks for a significant prior uptrend, and notes that many possible double tops form along the way up without ever being confirmed. Two similar highs in the middle of a range are just two highs.

In ChartSchool's description, the first peak marks the high of the trend so far and is unremarkable on its own. A trough follows. The second peak is a rally back to about the same level, where price meets resistance from the first high. Only once that resistance holds is a double top even possible, and it still isn't complete.

The peaks don't have to match exactly, and how far apart they are matters. ChartSchool cautions that peaks very close together may just reflect ordinary resistance rather than a lasting change between buyers and sellers. It also suggests studying the trough: if it drags on and struggles to rise, demand may be drying up.

The support level and confirmation

The level that decides a double top is the lowest point between the two peaks. It's often called the neckline, as in the head and shoulders, but here it's usually a single horizontal support level rather than a line joining two lows.

ChartSchool is explicit that even after price trades back down to support, the pattern and the trend reversal are still incomplete. The double top is complete only when price breaks below that support. Until then, the uptrend is intact, and two similar peaks can resolve with price simply turning higher again. Calling the top at the second peak is an easy way to misread the pattern.

Anatomy of a double bottom

The double bottom reverses the picture. ChartSchool looks for a significant prior downtrend, then a first low that marks the bottom of the decline so far, a rally, and a second decline that meets support near the first low. Even after that support holds, it says, only the possibility of a double bottom exists.

The resistance level and confirmation

For a double bottom, the deciding level is the highest point of the rally between the two lows. ChartSchool puts it simply: the formation isn't complete until that previous reaction high is taken out, and waiting for the breakout is paramount. Before then, the downtrend is still in place, however promising the second low looks.

What counts as a convincing break varies between sources, and some apply price or time filters to screen out brief pokes through the level. The hub explains the trade-off: filters reduce false signals but mean acting later.

Volume

ChartSchool reads volume as supporting evidence at each stage of a double top. The rally to the second peak usually comes on low volume. The decline from the second peak should show expanding volume, a faster descent, or both, and it looks for the same on the break of support.

For the double bottom, ChartSchool says volume matters more than for the double top. It looks for clear evidence that volume and buying pressure are accelerating on the advance from the second low, and for increased volume or a faster ascent on the break of resistance. It also notes that rising volume on the first rally could signal early buying.

These are tendencies one source describes, not conditions every pattern meets. Treat volume as one input to weigh alongside the break of the level, not as a switch that confirms or cancels the pattern on its own.

Retests, pullbacks and throwbacks

After a break, the old level often swaps roles. ChartSchool notes that broken support becomes potential resistance in a double top, and broken resistance becomes potential support in a double bottom, and that price sometimes comes back to test it.

Bulkowski names these returns by direction. After a downward breakout, as in a double top, a return to the breakout price within 30 days is a pullback. After an upward breakout, as in a double bottom, it's a throwback. Terminology varies between sources, so check how a guide defines them.

A retest is a possibility, not a step in the pattern. Waiting for one can mean missing the move, and a return that carries back through the level isn't a retest any more: it's the start of a failed pattern.

The measured-move convention

ChartSchool's target for a double top takes the distance from the support break up to the peaks and subtracts it from the break. For a double bottom, it adds the distance from the resistance breakout down to the lows to the breakout price. Bulkowski calls this kind of calculation a measure rule, describing a minimum price move after the breakout.

Marker 7 in the first two diagrams shows the idea. It's a reference point, not a prediction of where price will go or how quickly. For why TradingLoot doesn't publish hit rates for targets, see probabilities and limits.

Similar patterns

Some other shapes share features with double tops and bottoms. These sections compare them:

• Triple tops and bottoms compared with double tops and bottoms
• Rectangles compared with double tops
• Cup and handle compared with double bottoms

False breakouts and failed patterns

A double top or bottom can go wrong at two stages. Before confirmation, the pattern simply doesn't complete: support holds and the trend carries on. That isn't a failed pattern, because there never was a confirmed one. After confirmation, price can break the level, make little progress and come back through it. That is a failed breakout.

A failed breakout is a broad idea. Bulkowski's busted pattern is a narrower definition: price moves no more than 10% after the breakout, then reverses and crosses the other side of the pattern, starting a trend in the new direction. So not every failed breakout is a busted pattern in his sense. For why failures still carry information, see our summary of Bulkowski's research on failure.

Textbook vs live charts

Live double tops and bottoms rarely look like the diagrams. The second peak may fall a little short of the first or slightly exceed it, the trough may be rounded or drawn out, and the support level may be a zone rather than a clean line. The shape is often obvious only after the break.

Shapes that look alike can also behave differently. Our summary of Bulkowski's encyclopedia explains that the book splits double tops and bottoms into four variants each, with a chapter for every one. That level of detail is beyond this guide, but it's a reminder not to treat every double peak as the same pattern.

In TradingLoot's view, practising on historical data with replay is a good way to test whether you would have identified the deciding level before the break, rather than afterwards.

Common misreadings

These are ways the patterns are often misread, as TradingLoot sees it.

"Two equal highs make a double top."

Not without a prior uptrend and a confirmed break of the support between them.

"The second peak is the signal."

The second peak completes the shape. The break of support is what confirms the pattern.

"Strong volume guarantees the breakout."

Volume is supporting evidence. It can strengthen a reading, but it can't guarantee one.

"The measured move tells you where price will go."

It's a convention for a rough reference point, not a forecast of distance or timing.

"A failed double top means the method is useless."

Failure is part of how any pattern behaves, and it's information in its own right.

Key takeaways

• A double top needs a prior uptrend; a double bottom needs a prior downtrend.
• Two similar highs or lows alone are only a possible pattern.
• The deciding level is the low between the peaks, or the high between the lows.
• ChartSchool treats volume as more important for double bottoms than for double tops.
• Retests and measured moves are possibilities and conventions, not certainties.
• A confirmed pattern can fail; a busted pattern is Bulkowski's narrower definition of one kind of failure.

Further reading

• Head and Shoulders Pattern: the three-peak reversal pattern, confirmed in the same way by a break of the line through the lows.
• Encyclopedia of Chart Patterns by Thomas Bulkowski: how he measured patterns, including how they fail.
• Technical Analysis of the Financial Markets by John J. Murphy: a broad foundation in which price patterns are one of many tools.
• Chart Patterns: the method that applies to every pattern.