"Double Top" and "Double Bottom" are highly reliable algorithms that are frequently used in technical analysis. In these algorithms, which are shaped according to the support and resistance levels of the prices, it is aimed to predict the price movements that may occur in the trend.
The double top pattern, which looks like the letter "M" in shape, is formed in an uptrend.
In an uptrend, price movements go up to the peak. Here it encounters resistance and the price bounces back from this high. The price action that falls to the support level creates a bottom point here and rises from this point to the resistance level.
Price movements encounter a resistance again and begin to fall, thus forming two peaks at the resistance level.
The formation is completed when the price movements fall back to the support level. For traders who confirm the downtrend with the "Double Top", this is considered a sell signal. It is predicted that the decrease in price movements will be as high as the height between the formed support and resistance levels.
The double bottom formation, which looks like the letter "W" in shape, occurs in a downtrend and moves with the opposite logic of the double top.
In a downtrend, price movements go down to the bottom. It encounters a support and the price bounces back from this low. The price action that rises to the resistance level creates a peak here, from this point to the support level. Price movements encounter a support again and begin to rise, thus forming two lows at the support level. The formation is completed when the price movements rise to the resistance level again. For investors who confirm the uptrend with "Double Bottom", this is considered a buy signal. It is predicted that the rise in price movements will be as high as the height between the formed support and resistance levels.
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