Tech view: Understanding double top and bottom patterns

A double bottom is formed following a single rounding bottom pattern which can also be the first sign of a potential reversal

Double top and bottom patterns are formed from consecutive rounding tops and bottoms. These patterns are often used in conjunction with other indicators in technical charting.

A double top pattern is formed from two consecutive rounding tops. The first rounding top forms an upside-down ‘U’ pattern. Rounding tops can often be an indicator for a bearish reversal, as they often occur after an extended bullish rally. If a double top occurs, the second rounded top will usually be slightly below the first rounded tops peak indicating resistance and exhaustion. Their formation suggests that investors are seeking to obtain final profits