Price Action: Double Tops and Double Bottoms (Part 2)

Price Action: Double Tops and Double Bottoms (Part 2) 1. Testing and Failure A "double top" is the market testing the same resistance (prior high) twice; a "double bottom" is testing the same support (prior low) twice. If a double top fails, price continues upward; if a double bottom fails, price continues downward. Measured move: once the neckline is broken, the target is typically projected at an equal distance based on the "height of the double top / double bottom." 2. The First Reversal in a Strong Trend Is Usually Minor In a strong bear trend characterized by breakouts or extremely narrow channels, the first bounce is usually just a move into a trading range or the formation of a bear flag. Bears often maintain their positions with stops placed very far away; the risk-reward is poor, but the win rate is high. For bulls to achieve a true reversal, they must first push price back to the prior low for "confirmation," constructing a major high/low with 10+ bars and a two-leg structure