Technical Analysis of Double Tops Chart Pattern in XAUUSD

To analyze the double tops chart patterns a trader needs to first learn about the technical analysis of double tops chart patterns explained below.

Double Top Trading Pattern

Double tops xauusd pattern is a reversal chart pattern that is formed after an extended upward gold trend.

As its name implies, this double tops chart pattern formation is made up of two consecutive peaks on the gold chart that are roughly equal, with a moderate trough in between the two peaks.

Double tops xauusd pattern formation is considered complete once gold trading price makes the second peak & then penetrates the lowest point between the highs, called the neckline.

The sell signal from this double top pattern formation occurs when the xauusd market breaks-out below neckline.

In XAUUSD, this double tops pattern is used as an early warning signal that a bullish xauusd trend is about to reverse.

However, double top pattern is only confirmed once the neckline is broken & the xauusd market moves below the neckline.

Neck Line is just another name for the last support level formed on the XAUUSD chart.

Summary:

• Double tops xauusd pattern forms after an extended move upwards- upwards xauusd trend
• This double tops chart pattern signal indicates that there will be a reversal in the xauusd market trend
• We sell when price breaks-out below the neck-line: as explained on the gold trading example displayed and shown below.

XAUUSD Trade a Double Top Chart Pattern in XAUUSD?

Double tops xauusd pattern look like an M-Shape pattern, the best reversal xauusd trading signal from the double top chart pattern is where second top is lower than the first top as illustrated & shown below:

This means that the reversal xauusd signal can be confirmed by drawing a downwards xauusd trend line as shown below. If a trader opens a sell xauusd trade using this double tops reversal xauusd signal the stop loss will be placed just above this downward trend line.

How to Trade the Double Tops Chart Pattern - How to Analyze a Double Tops Chart Pattern in XAUUSD