Double Top
Two roughly equal peaks with a pullback between them — the market tried the same high twice and failed both times.
Price rallies to a high, pulls back, rallies again to almost exactly the same level — and fails to break through a second time. That failure to make a new high on the second attempt is the whole signal: it shows the buying pressure that drove the first peak genuinely couldn't push any further the second time around.
Like Head & Shoulders, this isn't considered confirmed until price breaks below the low of the pullback between the two peaks — without that, it's just two peaks, which happens constantly in normal trading.
Confirmation is the break below the pullback low between the two peaks — not the second peak's failure to exceed the first. A stop above that second peak's high is a common way to define where the setup would be proven wrong. Some traders use the pattern's height (peak down to the pullback low) projected downward from the breakout as a rough target.
Two peaks at similar levels happen constantly in ordinary, non-reversing trading — the pattern only means something once that pullback low actually breaks. Acting on the second peak alone, before confirmation, is the single most common mistake, and risks getting caught positioned against a trend that simply continues upward.
- The two peaks don't need to be pixel-identical — "roughly equal" (within a percent or two) is the normal, realistic case.
- Confirmation is the break below the middle pullback low, not the second peak itself.
- A shallow, narrow pullback between the two peaks (versus a deep one) generally reads as a stronger rejection.