How Do I Trade a Double Top Chart Pattern?

To interpret the double tops chart patterns a trader needs to first learn about the technical analysis of double tops chart patterns explained below.

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 on the gold chart that are roughly equal, with a moderate trough in between the 2 peaks.

Double tops xauusd pattern formation is considered complete once xauusd trading price makes the second peak and then penetrates the lowest point between the highs, called the neckline.

The sell signal from this double top pattern formation occurs when the xauusd market breaks-out below the neckline.

In Gold, this double tops chart pattern 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 neck line is broken & the xauusd market moves below the neckline.

Neck Line is just another name for the last support level formed on the Gold chart.

Summary:

• Double tops xauusd pattern forms after an extended move upward - upward gold trend
• This double tops chart pattern signal indicates that there will be a reversal in xauusd market trend
• We sell when the price breaks-out below the neck-line: as described on the xauusd example illustrated & explained below.

Gold Trade a Double Top Chart Pattern?

Double tops xauusd pattern look like an MShape pattern, the best reversal gold signal from the double tops pattern is where the second top is lower than the first top as illustrated below:

This means that the reversal gold signal can be confirmed by drawing a downward gold trend line as shown below. If a trader opens a sell gold trade using this double tops reversal gold signal the stop loss will be placed just above this downwards trend line.

How to Trade the Double Tops Chart Pattern - How to Analyze a Double Tops Chart Pattern in Gold Trading