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Double top is a term used by technical analysts to describe a chart pattern which looks like a capital letter "M". In a double top a stock rises to a point, then falls, then rises again to the same level as the first peak, and then drops once again. The two high points (the double top) represent a resistance level. Often a stock has difficulty breaking through the resistance level defined by a double top. If a stock does break through a double top resistance level it is generally considered a bullish signal. The opposite of a double top is a double bottom (looks like a "W"), a support level which technical analysts believe difficult for a stock to penetrate. Similar to a double top, if a stock breaks below a double bottom support level it is considered bearish. |
