How Can I Differentiate a Gold Double Bottoms from a Gold Trading Double Tops Pattern?

How to Identify & Trade Double Bottom Pattern & Double Top Pattern

A double top trading pattern has an M shape and it occurs at a market top hence its name double top chart pattern and it signals a bearish xauusd trading price reversal in the gold market. Once a double top chart pattern is confirmed then the xauusd market will be considered to be bearish, therefore a double tops is bearish.

A double bottoms chart pattern has a W shape and it occurs at a market bottom hence its name double bottom chart pattern and it signals a bullish xauusd trading price reversal in the gold market. Once a double bottom chart pattern is confirmed then the xauusd market will be considered to be bullish, therefore a double bottoms is bullish.

To identify double top & double bottom chart patterns the example below explain the 2 xauusd trading patterns:

Double Top Trading Pattern

Double tops xauusd chart pattern is a reversal pattern that is formed after an extended upwards xauusd trend. As its name implies, this double tops chart pattern formation is made up of two consecutive peaks which are roughly equal, with a moderate trough between.

This double top pattern formation is considered complete once xauusd trading price makes the second peak & then penetrates the lowest point between the highs, known as the neck line. The sell signal from this double top pattern formation occurs when the xauusd market breaks-out below the neckline.

In Gold, this double top pattern formation is used as a early warning signal that a bullish Gold trend is about to reverse. However, double top chart pattern is only confirmed once the neckline is broken & the xauusd market moves below the neck-line. Neckline is just another name for the last support level formed on the Gold chart.

Summary:

• Double tops xauusd chart pattern forms after an extended move upwards
• This double top pattern formation indicates that there will be a reversal in the xauusd market
• We sell when the price breaks-out below neckline point: see below for explanation.

Double Top Pattern - How Can I Differentiate a Double Bottoms from a Double Top?

Double Bottom Trading Pattern

Double bottoms xauusd pattern is a reversal gold pattern which forms after an extended downward xauusd trend. Double bottoms xauusd trading pattern is made up of 2 consecutive troughs that are roughly equal, with a moderate peak between.

This double bottoms pattern formation is considered complete once xauusd trading price makes the second low & then penetrates the highest point between the lows, known as the neck line. The buy indication from this bottoming out signal occurs when the xauusd market breaks-out the neck line to the upside.

In Gold, this double bottom pattern formation is an early warning signal that the bearish Gold trend is about to reverse. It is only considered complete/completed once the neck-line is broken. In this double bottoms chart pattern formation the neck line is the resistance level for the xauusd price. Once this resistance is broken the xauusd market will move up.

Summary:

• Double bottom xauusd trading pattern forms after an extended move downward
• This Double bottoms xauusd chart pattern formation indicates that there will be a reversal in the xauusd market
• We buy when price breaks-out above neckline point: see below for the explanation.

Double Bottoms Pattern - How Can I Differentiate a Double Bottom from a Double Tops?