Common Patterns in Morphology 3: Double Top/Triple Top Pattern
Similar to the head and shoulders top, the double top/triple top is a reversal pattern, which usually indicates that the market will turn to a decline. The standard double top pattern consists of two high points, and the heights of the two high points are similar. When the price has experienced a round of rise, it touches the first high point of the double top (top 1) and encounters resistance and falls back, and gets support and rebounds at the neckline position, but when it reaches the position similar to the previous high (top 2), the shorts exert force again and break the neckline (the triple top pattern will rebound to the previous high once again). At this time, the double top pattern is confirmed and the market will turn to a decline.
In general, breaking the neckline can be determined as the position for shorting. The theoretical falling target (satisfaction point) is the distance between the top high and the neckline. If the neckline is crossed again, it is determined to be a failed double top/triple top pattern, and the stop loss is exited.
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