A double top is a reversal pattern in which price rises to a high, pulls back, rises to about the same high again and fails. The low of the pullback is the neckline. When price closes below it, traders read the uptrend as over and look to sell, aiming for a move as far below the neckline as the peaks are above it.
In short
- A double top has two peaks at about the same price, separated by a pullback. The low of that pullback is the neckline.
- It is confirmed only when price closes below the neckline. Two peaks without the break are a possible pattern, and many never complete.
- The measured move is the height from the peaks to the neckline, projected down from the break.
- The double bottom is the same pattern upside down, with a buy on a close above the level between the two lows.
- On a $25,000 Direct account, a 54-pip stop on 0.23 lots of EUR/USD risks about $124, 12% of the $1,000 first-day daily loss limit.
What is a double top pattern?
A double top is a chart pattern of two similar highs with a dip between them, shaped like the letter M. The second high fails to break the first, which shows buyers could not push through the same price twice. The pullback low between the peaks is the neckline, and a close beneath it completes the pattern.
It appears after an uptrend. In a sideways market, two similar highs are only the top of a range. The pattern matters because of the trend it ends, and the longer the rise before it, the more weight traders give it.
The double top is one of the reversal patterns in the Academy chart patterns lesson. The head and shoulders pattern guide covers its three-peak cousin. Both rest on the same idea: a level held, and then it broke.
What does a double top look like?
A clear double top has an uptrend before it, two peaks within a small margin of each other, a pullback of meaningful depth between them and a flat or gently sloping neckline. The peaks do not need to match exactly. Traders often accept a difference of up to about 10% of the pattern's height.
A short checklist keeps the drawing honest:
- A rise of several swings comes before the first peak.
- The second peak is within a set tolerance of the first, such as 10% of the height. It is not clearly higher, or the pattern is a breakout.
- The pullback is deep enough to matter, at least a third of the rise to the first peak. A shallow dip is noise.
- The two peaks are separated by enough candles to be two events, not one.
- The neckline is the lowest close or low between the peaks. Pick one method and keep to it.
Some traders call a pattern with three similar peaks a triple top. It is read the same way, with the neckline under the two pullback lows.
How do you confirm a double top?
Confirm it with a candle close below the neckline. A wick through the line that closes back above is not a break, and it is often a sweep of the stops under the neckline. The liquidity sweep guide explains why that happens and how to tell it from a real break.
Two extra filters are common. The first is a retest: price returns to the neckline from below and fails, giving a closer stop. The second is a change in momentum, such as a lower high in RSI at the second peak, which the RSI indicator guide and the divergence trading guide cover. Neither is required, and each removes some trades.
Be careful with a second peak that is slightly higher than the first. Price has taken out the earlier high, which can be a sweep of the buy stops above it. The pattern is still valid in that case if the close back under the level is quick, but the stop above the peak has to be a little higher.
How do you trade a double top?
Sell on a close below the neckline, or on a retest of it, put the stop above the higher of the two peaks or above the retest high, and set the target at the measured move. A retest gives a tighter stop and misses some trades. A direct break gets the move and has a longer stop.
The measured move is the height of the pattern, from the peaks down to the neckline, projected below the neckline. If the peaks are at 1.0950 and the neckline is at 1.0850, the height is 100 pips and the target is 1.0750. Treat it as a guide. Many traders take half of the position off at half the distance and trail the rest.
| Entry style | Stop | What you get |
|---|---|---|
| Sell on the first close below the neckline | Above the peaks | A long stop, so a small size, but few missed trades |
| Sell on the retest of the neckline | Above the retest high | A shorter stop and a better ratio, but the retest may not come |
Before you enter, check the room to the next support. If a strong level sits 20 pips below the neckline, the measured move is blocked, and the trade is not worth the risk. The risk to reward ratio guide shows what ratio a given win rate needs.
What is the double bottom pattern?
The double bottom is the double top upside down. Price falls to a low, rebounds, falls to about the same low and fails to break it, forming a W. The high of the rebound is the neckline, and a close above it is the buy signal.
The same rules apply in reverse. The target is the height of the pattern projected up from the neckline. The stop goes below the lower of the two lows or below the retest low. Its weakness is also the same: many W shapes form in a downtrend and then fail, so the prior trend and the close beyond the neckline decide whether it counts.
What does a double top trade look like with real numbers?
This example is a sell on a 4-hour EUR/USD chart, on a $25,000 Direct account risking 0.5% per trade, which is $125. One standard lot of EUR/USD is worth $10 a pip. The prices are made up for teaching.
- After a rise, EUR/USD makes a peak at 1.0950, pulls back to 1.0850 and rises to a second peak at 1.0946. The neckline is 1.0850 and the height is 100 pips.
- A 4-hour candle closes at 1.0838, below the neckline. Rather than chase it, wait for a retest.
- Price rallies back to 1.0848 and a candle closes back down. Sell at 1.0848, with the stop at 1.0902, above the retest high. The risk is 54 pips.
- Size: $125 / (54 x $10) = 0.231 lots, rounded down to 0.23. A pip is $2.30, so the risk is 54 x $2.30 = $124.20.
- The target is the measured move, 1.0750, which is 98 pips from entry. That is worth 98 x $2.30 = $225.40, a ratio of 1.8 to 1.
If price rises through 1.0902 the pattern has failed and the stop closes the trade. If it falls to 1.0800 and then rebounds to the neckline, many traders would have taken part of the profit there. Simulated trades carry costs like a live account: a commission when a trade opens and closes, and holding costs on positions kept overnight.
How this works on CMC Funded
On a $25,000 Direct account the daily loss limit is 4% of the day's starting equity, which is $1,000 on the first day, and the maximum loss is a fixed 6%, so the floor is $23,500. The limit is measured on equity, so a floating loss counts before the stop is hit. The $124.20 trade uses about 12% of the daily limit.
The pattern's stop is above the peaks or the retest, and the stop sets the size. If you trade the direct break with the stop above the peak at 1.0958, the stop is 110 pips from an entry at 1.0848. At the same $125 of risk, the size falls to 0.11 lots, and the target is worth less per pip.
The Direct profit target is 10%, which is $2,500, with at least 3 trading days and no time limit. Holding overnight and over the weekend is allowed, with holding costs, so a 4-hour pattern can be left to run. On the Classic route the daily limit is 5% and the maximum loss 10%. Read the rules for the definitions, and use the position size calculator.
Is the double top pattern reliable?
There is no dependable accuracy figure. Chart patterns are drawn by eye, so two traders see different tops on one chart, and published tests give mixed results. A double top gives you a defined entry, stop and target, which helps with consistency, but it does not tell you the outcome.
Hindsight is the main trap. Tops that led to a fall are easy to find afterward, and the many that broke upward are forgotten. To test the pattern, fix your rules for tolerance, depth and the neckline, mark 30 examples on one pair and record how many reached the measured move. The trading journal template guide shows what to log.
Common mistakes
- Selling at the second peak. Without a close below the neckline, the pattern is not complete.
- Counting a wick below the neckline. Wait for a close.
- Calling any two highs a double top. Without a prior trend or a real pullback, it is a range.
- Putting the stop too close. A stop just above the neckline is hit by the retest.
- Expecting the full target. Look for support between the neckline and the target.
- Ignoring the higher timeframe. A double top inside a strong daily uptrend is usually a pause.
- Sizing from the pattern and not the stop. The lots follow from the distance to the stop, 54 pips here.
Questions traders ask
How reliable is the double top?
There is no firm figure. Many double tops fail by breaking upward before the neckline gives way. Treat the close below the neckline as the signal, and check your own records for how often it follows through.
What is the target for a double top?
The usual target is the height of the pattern, from the peaks to the neckline, projected down from the neckline. For peaks 100 pips above the neckline, the target is 100 pips below it.
What is the difference between a double top and a triple top?
A triple top has three similar peaks instead of two. It is read the same way, with a sell on a close below the neckline. The third failure is taken as slightly stronger evidence.
Does the double top work on every timeframe?
It appears on all of them, from the 5-minute chart to the weekly. Longer timeframes give bigger patterns, longer stops and smaller sizes. Small patterns on short charts are common and more often noise.
Next steps
The Academy chart patterns lesson covers double tops and bottoms alongside flags and triangles. Read the bear flag pattern guide for a continuation pattern that often appears after a neckline break, and the shooting star candlestick guide for a candle that often marks the second peak. Size each trade from its stop with the position size calculator, and read the loss limits on the rules page.
You can compare the Classic and Direct routes on the challenges page.