Identifying & Trading Double Tops in Forex

Welcome to our guide on identifying and trading double tops in the forex market. Double tops are a common pattern in technical analysis that can provide valuable insights for traders. In this article, we will explain what a double top is, how to identify it, and strategies for trading this pattern in the forex market.

What is a Double Top?

A double top is a reversal pattern that forms after an extended uptrend. It consists of two peaks at approximately the same price level, with a trough in between. The pattern is considered complete when the price breaks below the trough, signaling a potential reversal of the trend.

Identifying a Double Top

There are several key characteristics to look for when identifying a double top:

  • The price should be in an uptrend before the pattern forms.
  • There should be two peaks at a similar price level, with a clear trough in between.
  • The trough should act as a support level that is eventually broken.
  • Volume should decline as the pattern forms, then increase when the price breaks below the trough.

Trading Strategies for Double Tops

Once you have identified a double top pattern, there are several strategies you can use to trade it:

  • Short the currency pair when the price breaks below the trough, with a stop loss above the second peak.
  • Wait for a retest of the broken support level before entering a short position.
  • Target a price level that is equal to the distance between the peaks and the trough.


What is the success rate of trading double tops?

The success rate of trading double tops can vary depending on market conditions and the trader’s skill level. However, many traders find this pattern to be effective in identifying potential trend reversals.

How can I improve my ability to identify double tops?

Practice is key to improving your ability to identify double tops. Look for patterns on historical price charts and compare them to real-time data to hone your skills.


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