A double top is the market testing a high twice and failing twice — an "M" shape after an uptrend. The first rejection could be routine profit-taking; the second means real supply sits at that price. When the low between the two peaks (the neckline) breaks, the pattern confirms and the uptrend is officially in trouble.

Identification rules

1. A prior uptrend worth reversing
2. Two peaks at roughly the same level — within about 1–2%; the second peak slightly undershooting is fine, slightly overshooting (a sweep of top 1's highs that instantly fails) is actually the strongest version
3. A meaningful valley between them — a real pullback (several percent / many candles), not two wiggles a few bars apart
4. Confirmation: a candle close below the neckline — until then it's just a range at the highs, and "double tops" that never confirm resolve upward constantly

How to trade it

• Standard entry: short on the close below the neckline; stop above the second peak
• Retest entry (better R:R): wait for the pullback to the broken neckline — old support acting as resistance — and short the rejection candle there (hammer logic in reverse); stop above the retest high
• Aggressive entry (advanced): short at top 2 itself when it forms as a failed sweep of top 1 with a shooting star or bearish engulfing; stop above the wick — great price, requires the pattern to complete around you
• Target: the measured move — the pattern's height (peaks to neckline) projected down from the break; partials there, trail the rest

Why the second failure matters

At top 1, buyers were still confident — the dip got bought. The rally back to the same level attracts breakout hopefuls and re-entering longs… who all get rejected again. Top 2's failure converts an entire cohort of recent buyers into trapped sellers, and the neckline is where their capitulation concentrates. The ICT school reads the sweep-version of top 2 as a liquidity raid — same market event, different vocabulary.

The failure mode: fake double tops

The pattern's bad reputation comes from counting it too early. Two touches of a high in an ongoing bull trend is normal consolidation — most resolve upward. The discipline: no confirmation, no trade; and treat a reclaim above the neckline after the break (or a close above top 2 any time) as the hard invalidation it is. Failed double tops squeeze violently, because everyone who shorted the "obvious" pattern must cover.

Practice it honestly

Replay makes the early-counting problem visible fast: in the free chart replay tool, mark every potential double top as top 2 forms — future hidden — then track which confirm and which morph into continuation. A 50-example log per the backtesting method will teach you the base rates no article can: how often unconfirmed M-shapes break upward, and how much the retest entry improves your average.

FAQ

How reliable is a double top?

Confirmed (neckline close) and after an extended trend: solidly tradeable, with the measured move reached in a comfortable majority of cases. Unconfirmed M-shapes: closer to noise. Confirmation is the entire difference.

Do the two tops need to be exactly equal?

No — within a zone. A second top that sweeps slightly above the first and immediately fails is the strongest variant (trapped breakout buyers), while a clearly lower second top is trending toward a lower-high structure — also bearish, but a different trade.

Double top vs. head and shoulders?

Both are failed-continuation reversals; the head and shoulders inserts a higher middle peak. H&S gives more structure to read; the double top appears more often. Trade both off their necklines with measured targets.