Double Top

Categories: Technical Analysis,

Double top is term that technical analysts use to describe a stock price pattern that, when depicted on a chart, shows two gains to the same dollar level separated by a price drop.For example, if a stock that had been trading about $28 a share rose to $35, dropped back to trade about $28 for several weeks, and then rose to $35 again, analysts would identify $35 as a double top. An analyst observing this pattern might conclude that investors were comfortable paying $35 for the stock, and that the price might not rise above that level in the near term. In technical terms, the analyst would say that there was resistance above that price. However, there's no way to predict whether the price will in fact remain at $35 or gain value and hit new a high.