The double top pattern is a technical analysis chart pattern used in trading to signal a potential reversal in a security's price trend. It is characterized by:
Two Peaks: The pattern consists of two prominent peaks at approximately the same price level, separated by a trough or dip.
Support Level: A support level is formed at the lowest point between the two peaks, known as the "neckline."
Bearish Reversal Signal: After the formation of the second peak, if the price breaks below the support level (neckline), it often signals a bearish reversal and a potential downtrend.
Traders use this pattern to predict that an uptrend may be ending, and the price might start to decline.