This Secret Pattern Predicted 89% of Major Market Crashes

Double Tops are one of the most common chart patterns - and in fact they predicted a vast majority of big market moves. In this article I will teach you to identify and trade this chart pattern profitably.

Identifying The Pattern
The Double Top pattern occurs when price is stopped twice at the same Resistance level. This pattern is also called the 'M', because its resemblance to the letter M. It is one of the most reliable and common patterns - almost 80% of the patterns reach their projected target.

The price level between the two tops is called the Neckline.


Volume
Volume should be lighter in the 2nd top - to indicate that buyers are weakening.

How To Trade
There are several ways to trade this pattern: The Conservative Way which is the known way, and the Aggressive way which is yet unknown to many traders.

The Conservative Way
The Conservative trader will enter at the breakout of the neckline, or at the pullback to the neckline after the breakout - for extra assurance.

Illustration:

The Aggressive Trader
The Aggressive Trader will attempt to catch the trade from its second top! It is an amazing, undocumented idea, but it can give you immense advantage over other traders, as the number of people who trade the Double Top this way is very small.

The Aggressive trader will look for a candlestick formation of reversal right at the second top, to enter as early as possible:

Note:

*If after aggressive entry, price stops at the neckline, immediately close the trade. As long as the neckline isn't broken, this might evolve as a different pattern. This is one drawback to the aggressive attitude: trader is not sure of the actual nature of the pattern.

*Neckline can be diagonal, like in this example:

Profit Target
The Profit Target is measured using the Measure Rule. That is, you calculate the distance from neckline to the tops, and project this range from the breakout place. Illustration:

Important: Time Factor
The Double Top should reach its target in half the time the pattern was formed. If this time has passed - the Double Top will not reach its target and your position should be liquidated.

This is a great pattern to trade, that provides excellent Risk:Reward entries with high win percentage.

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