Double top and double bottom - the two most well-known pattern in the foreign exchange market or online forex trading currency. M-or W-shaped patterns appear regularly on the 15-minute charts and other diagrams.
Basic double top pattern consists of 3 stages:
1. price rises for a short period of time;
2. continue to be little correlation;
3. price makes another attempt to get up and falls again, as the dynamics of prices revised downward.
Why is this happening? It is assumed that the price is memory. When the price of the asset reaches the point of former resistance or support, traders begin to buy or sell based on the belief that if the prices have recently been held, they will continue to follow this trend. This method is often beneficial, but even if you start losing, there is a way quite different, non-traditional treatments.
To properly sell the double peak, the trader must define the components of the development of this formation. Otherwise, the pattern may seem to a few cuts, which significantly lowers the chances of a successful transaction. The reversal must be at least 38,2% from the previous one, to be considered valid.
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