Trading term

What is Double top?

A double top is a bearish reversal pattern that forms after an uptrend: price rallies to a high, pulls back, then rallies to roughly the same high a second time and fails. The two peaks look like an 'M'. A close below the pullback low between them (the neckline) confirms the reversal.

A double top marks a level where buyers twice tried and twice failed to push higher. Price climbs to a peak, retreats to a support level (the neckline), rallies back to about the same peak — and stalls there again, unable to make a new high. That second rejection at the same resistance shows the uptrend's buyers are exhausted. The shape traces a clear 'M'.

The pattern isn't confirmed until price closes below the neckline — the low of the pullback between the two peaks. That break is the trigger; before it, the two peaks are just a stall, and price can still push through. A common target projects the height of the pattern (peak to neckline) downward from the break. The two peaks don't need to be identical — within a percent or two is normal.

A double top (M) reversal
NecklineTop 1Top 2Neckline break ↓

Two peaks at roughly the same level — buyers twice fail at the same resistance — sit on a neckline. The reversal confirms only when price closes below that neckline.

For example

A stock rallies to $60, pulls back to $54, rallies to $59.5 (roughly the same high), then rolls over. When it closes below the $54 neckline, the double top confirms, projecting a move toward about $48 ($60−$54 = $6, below $54).

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Why it matters to you

A double top is one of the clearest 'the uptrend is failing' signals because it shows buyers failing at the exact same level twice — an unambiguous loss of momentum. It hands a trader a defined trigger (the neckline break), a measured target, and an obvious invalidation level (a new high above the peaks).

⚠ Wait for the neckline break

The mistake is shorting the second peak, assuming the double top is 'done.' Until price closes below the neckline, it's just two highs — plenty of would-be double tops simply break to new highs instead. The neckline break is the confirmation; the second peak alone is not.

Frequently asked questions

Is a double top bullish or bearish?

A double top is bearish — it forms at the end of an uptrend and signals a reversal down. Price twice fails to break above the same resistance, and a close below the neckline (the pullback low between the peaks) confirms the downturn. Its mirror image, the double bottom, is bullish.

How do you confirm a double top?

Confirmation comes when price closes below the neckline — the low of the pullback between the two peaks — ideally on rising volume. Before that break, the pattern isn't complete and price can still make a new high. Many traders also watch for a failed retest of the broken neckline.

What is the price target for a double top?

The classic method measures the height of the pattern — from the peaks down to the neckline — and projects that same distance downward from the neckline break. It's an estimate, not a guarantee, so most traders manage the trade with other levels too.

Do the two tops have to be the same height?

No — they should be roughly equal, typically within a percent or two, but they don't need to be identical. What matters is that price twice failed at about the same resistance level. A large difference between the peaks weakens the pattern.

Related terms

Ascending triangleAn ascending triangle is a bullish continuation pattern: a flat horizontal resistance line on top, with a rising trendline of higher lows beneath it. As the higher lows squeeze price against the ceiling, pressure builds — and it usually resolves with a breakout up through the resistance.ATR (Average True Range)ATR (Average True Range) measures how much a security typically moves in a period — its volatility — as an average of recent trading ranges. It doesn't say which direction price is heading, only how far it tends to travel, which makes it a core tool for stop-losses and position size.Bollinger BandsBollinger Bands wrap a price chart in three lines: a middle moving average with an upper and lower band set two standard deviations away. The bands widen when volatility rises and squeeze together when it falls, framing whether price is relatively high or low.BreakdownA breakdown is when price falls decisively through a support level it had been holding above — the bearish mirror of a breakout. It signals sellers have overwhelmed the buyers defending support, and often triggers a fast move lower as stops and new sellers pile in.
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