What is double top pattern?

A double top is a chart pattern that is commonly used in technical analysis to identify potential sell signals. The pattern is formed when the price of a security reaches a high point, retraces to a certain level, then rallies back to the same high point again, only to fall back again. This creates two "tops" at approximately the same price level.

The double top pattern is thought to be a bearish reversal pattern, as it indicates that the security's price may be reaching a resistance level and may be unable to break through to higher levels. When the price falls back for the second time, it may signal that the uptrend has reversed and that the security is now in a downtrend.

It is important to note that the double top pattern is not a guarantee that the price of a security will fall. It is simply a pattern that may suggest a potential trend reversal and should be used in conjunction with other technical and fundamental analysis tools to confirm a sell signal. In addition, double tops can be subject to interpretation and may be influenced by the biases and expectations of the analyst. As a result, different analysts may come to different conclusions about the same data.