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Gate.io AMA : Reversal K-line Pattern - Double top _M top_
01 January 08:00
Let's study Reversal K-line Pattern - Double top (M top)
Definition :
A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset's price falls below a support level equal to the low between the two prior highs.
As shown in the following picture :
The technical characteristics of the double top
Appears in an uptrend
The two highs are at the same price level or the high on the right is slightly lower. There are very few double tops where the right high is higher than the left high.
Most double tops have less volume on the right high than on the left
The neckline of the double top is generally the horizontal line that passes through the first low point. Sometimes due to morphological reasons, it will be slightly inclined
The technical meaning of double top
Double top is a technical pattern of trend reversal. When the currency price falls below the double top neckline, it is a very reliable sell signal.
Example of BTC real order
In the 5-12BTC market, BTC hovered at the top and walked out of the double top form, and then the heavy volume fell below the neckline of $58,000. The price of the currency began to fall sharply, from $58,000 to a minimum of $29,000, with a drop of as much as 12 days. 46%.
Special note
(1) Technical meaning
A. Usually the second head of the double top is lower than the first, and rarely higher than the first head. As long as the second head is not more than 3% above or below the first head, it can still be considered a double top.
A double bottom is similar to a double top, with the second bottom generally being slightly higher than the first. The range above or below the first bottom is within 3%, which does not affect the establishment of the double bottom technical pattern.
B. Double tops and double bottoms are both measures of technical graphics. It is measured from the beginning of the neckline, plus the vertical spread from the neckline to the high or low point, which is the minimum drop or gain from a double top or bottom.
C. The longer the formation of double tops and bottoms, the more reliable the turnaround signal, and the more likely the reversal trend is a long-term trend; the longer the time, the more likely it is the top and bottom of the medium-term trend.
(2) In terms of transaction volume
A. The trading volume of the two heads of the double top will be significantly enlarged, but the trading volume of the second head is generally significantly lower than that of the first head, which reflects that the confidence of traders to continue to chase high and buy is weakened.
B. The trading volume at the two bottoms of the double bottom is very light, and the second bottom is more sparse, indicating that no traders are willing to continue to sell chips.
C. When the double bottom breaks through the neckline, if there is no cooperation with the simultaneous enlargement of the trading volume, the probability of failure to break through is relatively high. When the double top falls below the neckline, whether the volume is enlarged or not will not affect the effectiveness of the break.
Disclaimer:
This article is for reference only.
Such information provided by Gate.io does not constitute any investment advice and is not responsible for any of your investments.
Regarding technical analysis, market judgment, trading skills, trader sharing, etc., may involve potential risks, investment variables and uncertainties.
This article does not provide or imply any opportunity to guarantee profits.
Definition :
A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset's price falls below a support level equal to the low between the two prior highs.
As shown in the following picture :
Appears in an uptrend
The two highs are at the same price level or the high on the right is slightly lower. There are very few double tops where the right high is higher than the left high.
Most double tops have less volume on the right high than on the left
The neckline of the double top is generally the horizontal line that passes through the first low point. Sometimes due to morphological reasons, it will be slightly inclined
The technical meaning of double top
Double top is a technical pattern of trend reversal. When the currency price falls below the double top neckline, it is a very reliable sell signal.
Example of BTC real order
Special note
(1) Technical meaning
A. Usually the second head of the double top is lower than the first, and rarely higher than the first head. As long as the second head is not more than 3% above or below the first head, it can still be considered a double top.
A double bottom is similar to a double top, with the second bottom generally being slightly higher than the first. The range above or below the first bottom is within 3%, which does not affect the establishment of the double bottom technical pattern.
B. Double tops and double bottoms are both measures of technical graphics. It is measured from the beginning of the neckline, plus the vertical spread from the neckline to the high or low point, which is the minimum drop or gain from a double top or bottom.
C. The longer the formation of double tops and bottoms, the more reliable the turnaround signal, and the more likely the reversal trend is a long-term trend; the longer the time, the more likely it is the top and bottom of the medium-term trend.
(2) In terms of transaction volume
A. The trading volume of the two heads of the double top will be significantly enlarged, but the trading volume of the second head is generally significantly lower than that of the first head, which reflects that the confidence of traders to continue to chase high and buy is weakened.
B. The trading volume at the two bottoms of the double bottom is very light, and the second bottom is more sparse, indicating that no traders are willing to continue to sell chips.
C. When the double bottom breaks through the neckline, if there is no cooperation with the simultaneous enlargement of the trading volume, the probability of failure to break through is relatively high. When the double top falls below the neckline, whether the volume is enlarged or not will not affect the effectiveness of the break.
Disclaimer:
This article is for reference only.
Such information provided by Gate.io does not constitute any investment advice and is not responsible for any of your investments.
Regarding technical analysis, market judgment, trading skills, trader sharing, etc., may involve potential risks, investment variables and uncertainties.
This article does not provide or imply any opportunity to guarantee profits.
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