Double Top / M Top
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
A reversal pattern that forms two peaks at approximately the same price level near the end of an uptrend. The second peak fails to break above the first, and a downward break through the neckline completes the pattern. Its shape resembles the letter 'M'.
Enter short when price clearly breaks below the neckline on a closing basis. Waiting for a retest (pullback to the neckline) provides greater certainty.
Project the distance from the peaks to the neckline downward from the neckline breakout point. For example: peaks at 1100, neckline at 1000, target is 900.
Place a stop-loss slightly above the second peak's high (1-3% above). If entering after a neckline retest, it can also be placed slightly above the neckline.
Ideally, high volume at the first peak, decreasing at the valley, and lower volume at the second peak compared to the first. A volume increase at the neckline breakdown enhances reliability.