1-2-3 Double Tops & Double Bottom Trading Strategy (Forex, Stocks, Crypto)

How do you know exactly which Double Top or Double Bottom reversal pattern to trade. One of the most powerful reversal patterns in any market is the Double Top and Double Bottom reversal pattern. And it’s one of the most lucrative reversal patterns because they signify the start of a new trend.

The double bottom chart pattern is found at the end of a downtrend and resembles the letter “W”. Price falls to a new low and then rallies slightly higher before returning to the new low. Unable to push price to a new lower low to continue the downtrend, sellers give up and price bounces sharply from this area. The bullish confirmation is specified by a break in the key price level situated at the high point between the ‘bottoms’ resistance level (neckline).

Similarly, the double top pattern reciprocates the double bottom pattern signaling a bearish reversal. Instead of the confirmation being shown at a break in the key resistance level, the double top occurs at the key support lows between the two high points. The double bottom and double top patterns are powerful technical tools used by traders in major financial markets including stock and forex.

• Download “ForexWOT-123DoubleTOP&BOTTOM” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “ForexWOT-123DoubleTOP&BOTTOM.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “ForexWOT-123DoubleTOP&BOTTOM” trading system and strategy.
• You will see the “1-2-3 Double TOP & BOTTOM Trading System” is available on your Chart.

 

The Double Top Bottom Patterns indicator scans the price charts automatically and identifies the best double top and double bottom pattern trading opportunities. Moreover, the indicator confirms the price breakout after the pattern and provides BUY and SELL arrow trading signals. So, traders can focus on trading the pattern, rather than searching for one.

The indicator works well for new and advanced traders. New traders will find it easy to spot the patterns, while advanced traders can combine support and resistance, channel breakouts, and trendlines for additional confirmation of the pattern. The pattern works well in all intraday chart time frames and daily, weekly and monthly charts, with higher time frame charts producing bigger, tradeable patterns.

• Double TOP Signal
• Drawing the Neck Line
  The second step of our trade identification process is to plot the actual neck line of the pattern. To do this you need to reference the swing bottom, which is located between the two tops. Then you would draw a horizontal line at this level. This would be the Double Top Neck Line.
• Neckline Breakout
  The next step is to confirm the validity of the pattern. If the price action closes a candle below the Neck Line, we confirm the validity of the formation.
• Trade Entry
  Since you have a confirmed Double Top pattern on the chart, you now have the go ahead signal to enter a position. For the Double Top, you would open a short or bearish trade.
• Stop Loss
  You should always secure your open trades with a stop loss order. Although the success rate of these patterns is relatively high, there is never a guarantee that the trade will work in your favor.

 

• Double BOTTOM Signal
• Drawing the Neck Line
  The second step of our trade identification process is to plot the actual neck line of the pattern. To do this you need to reference the swing top, which is located between the two bottoms. Then you would draw a horizontal line at this level. This would be the Double Top Neck Line.
• Neckline Breakout
  The next step is to confirm the validity of the pattern. If the price action closes a candle above the Neck Line, we confirm the validity of the formation.
• Trade Entry
  Since you have a confirmed Double Bottom pattern on the chart, you now have the go ahead signal to enter a position. For the Double Bottom, you would open a long or bullish trade.
• Stop Loss
  You should always secure your open trades with a stop loss order. Although the success rate of these patterns is relatively high, there is never a guarantee that the trade will work in your favor.

You should always secure your open trades with a stop loss order. Although the success rate of these patterns is relatively high, there is never a guarantee that the trade will work in your favor.