The Double Top is a powerful bearish reversal pattern that traders use to predict when an uptrend is about to turn into a downtrend. It’s called “Double Top” because the price reaches a resistance level twice but fails to break above it, creating two peaks (Top-1 and Top-2).
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How to Read a Double Top?
1. Top-1: Price hits resistance and drops.
2. Top-2: Price climbs again but fails to break the previous high (resistance).
3. Break of Support: Once price falls below the “neckline” (support level), it confirms the pattern.
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What Should You Do?
When the price fails to break the second top and starts falling, SELL is the better choice.
Many traders also wait for a confirmation candle closing below the neckline before entering a short trade.
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Pro Tip:
Always combine the Double Top pattern with volume indicators or other confirmations like RSI or MACD for more accurate trading decisions.
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