Formation of an M figure or double roof.
In it, a double top or M is formed in an uptrend and is a trend reversal figure. As in the previous case, Bollinger bands are a very helpful instrument to confirm the formation of said figure:
The first signal to take into account is a price close (first top) below or close to the upper band, followed by a bearish reaction that takes the price to the central band. The second signal is the formation of a second top, which should lie below the upper band, indicating less strength than the first top. Finally, the third signal that confirms the trend change figure is a strong bearish movement that leads the price to pierce the lower band. The following graph, which corresponds to the daily price of Exxon, shows an example of the formation of this trend change figure.