What is Double top and double bottom?
Qo'sh cho'qqi va qo'sh tub
In short
A reversal pattern: price tests a level twice and fails twice. A double top (M) forms after a rise, a double bottom (W) after a decline. It is confirmed only when the neckline between them breaks on a close.
Also known as: double bottom, triple top, M pattern, W pattern, qo'sh tub
The double top and double bottom are among the most common reversal patterns. Price tests a level twice and fails to get through it twice.
Double top (M shape)
After a rise, price makes a peak, pulls back (an interim low), then rallies to roughly the same peak and is rejected again. The low between the two peaks is the neckline. The pattern is confirmed when price closes below that line.
Double bottom (W shape)
The mirror: after a decline, price drops to the same low twice and is pushed back up both times. The neckline is the high between the two troughs; a close above it confirms. Tested three times, it becomes a triple top or triple bottom.
Target
The measured move: the distance between the peak (or trough) and the neckline is projected from the neckline in the breakout direction.
The common mistake
Shorting early as price approaches the second peak because "it will be a double top". Very often price breaks the level on the second try and the rally continues — that's not a pattern but a breakout. That's why waiting for the neckline break is essential. Lower volume on the second peak than on the first shows weakening buyers and strengthens the signal.
Two nearly equal peaks ($150 and $149.6), less volume on the second — buyers are tiring. The pattern was confirmed only by a close below $140. Height $10 → target $130. For a holder it is time to exit or tighten the stop.
Lows at $50 and $50.4, neckline $58 — height $8, target $66. After the second low a higher low ($55.5) formed. Entry on the retest at $58.5, stop $55.3: $3.2 of risk for $7.5 of potential — about 2.3R.
Example
Illustrative (double top): a stock rises to $85.00, pulls back to $78, then rallies to $84.60 and falls again. The neckline is $78.
- Price closes at $77.40 — below the neckline; the pattern is confirmed.
- Pattern height: $85.00 − $78.00 = $7.00
- Target: $78.00 − $7.00 = $71.00
A trader considering a short puts the stop not above the second peak but at $80.50, allowing for a neckline retest: risk $80.50 − $77.40 = $3.10, distance to target $77.40 − $71.00 = $6.40 → R:R ≈ 1:2.1. For an investor who is long, it is a signal to exit or review the stop.
Mistakes and tips
Two peaks alone are not the pattern — wait for a close below the neckline.
Several weeks between the peaks is better; a two-day "double top" may just be small-timeframe noise.
A second peak slightly above the first (sweeping stops) is also common; what matters is that price can't hold up there.
Frequently asked questions
- When is a double top confirmed?
- When price closes below the low between the two peaks (the neckline). Until then it is only a potential pattern.
- How do you trade a double bottom (W)?
- Most traders enter after a close above the high between the two troughs, or on a retest of that level, with the stop below the second trough.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
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