Double Top Pattern

A double top is a bearish reversal candlestick pattern that forms after an extended uptrend and signals a potential trend reversal to the downside. The pattern consists of two consecutive price peaks at approximately the same level — with a moderate trough (called the neckline) between them — creating a shape resembling the letter M on the price chart. The first peak forms as the uptrend reaches resistance and pulls back, the price then rallies again to test the same resistance level forming the second peak (confirming that sellers are defending that level consistently), and finally breaks below the neckline to confirm the reversal. The pattern is confirmed only when the price closes below the neckline — a break below the neckline is the entry trigger for short positions. The measured move target is calculated by subtracting the height of the pattern (distance from neckline to the tops) from the neckline breakout level. In Indian equity markets, double tops are reliable bearish reversal patterns when they appear after sustained uptrends in Nifty 50, sector indices, or individual stocks — particularly at major resistance levels such as 52-week highs or round numbers. High volume on the second peak's rejection and increasing volume on the neckline breakdown strengthen the pattern's reliability as a reversal signal.