Double Top
Two peaks at approximately the same price separated by a trough, forming an M shape on the chart.
How it is identified
Test: two highs within a small percentage of each other, separated by a decline to an intervening low that is later breached
Unit
qualitative
In depth
The formation is only complete when the intervening low is broken, which matters because unconfirmed double tops are simply two visits to a resistance zone — an extremely common occurrence. Requiring a specific tolerance between the two peaks, such as within 3%, turns an impression into a rule that can be tested. The behavioural story usually told is that the same sellers who acted at the first peak act again at the second, which is a claim about order clustering rather than about value. As with every formation in this category, the entry is descriptive and carries no forecast.
Worked example
Peaks at ₹534 and ₹531, within 0.6% of each other, with an intervening low at ₹486. The formation is not complete unless price closes below ₹486; until then it is a resistance zone being tested twice.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Double Top” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.