Double top BEARISH

What a double top is

The double top is the bearish mirror of the double bottom: an M-shaped pattern where price rallies to a high, pulls back, rallies to the same area and fails again, then breaks below the valley between the two peaks (the neckline) to confirm.

The psychology behind it

The first peak is enthusiasm meeting supply. The pullback finds dip buyers. The second rally is the test — and its failure is the message: with a full opportunity to make new highs, demand couldn't do it. The second peak often forms on lighter volume, the fingerprint of fading conviction. Longs from the first peak, given a second chance at their entry price, sell into it. The neckline break then converts the remaining hopeful longs into forced sellers.

How MKTDATA detects it

The template's trigger zone sits at the neckline, below the twin peaks. The engine's direction-aware momentum scoring looks for the bearish signature — price matching its high while RSI prints lower — and volume weighting rewards expansion on the breakdown rather than the rallies. As with all patterns in the library, staged matching means a stock carving its second peak can appear before the resolution, not after it.

Trading notes

Entry on the neckline break, invalidation above the second peak, measured move projecting the pattern's height below the neckline. The classic trap is calling the top too early: two touches of a high are just resistance until the neckline goes; genuine double tops are confirmed by the breakdown, not the shape. In strong uptrends, apparent double tops frequently resolve as consolidations instead — which is precisely the kind of base rate the live statistics below are designed to expose.