WEBVTT 00:02.500 --> 00:08.200 In this video, we're going to talk about double tops and double bottoms, and these are simple, yet 00:08.200 --> 00:14.080 effective ways to look at the marketplace in order to find a potential reversal. 00:14.650 --> 00:18.600 These are also known as W and M patterns. 00:18.610 --> 00:20.820 And I'll show you why here in a moment. 00:21.280 --> 00:29.080 A double top is simply one, it sounds like, when Price tries to rally to the same place twice and 00:29.080 --> 00:30.380 it is up for me to top. 00:30.580 --> 00:34.990 This is also called and impacter for obvious reasons. 00:35.410 --> 00:41.380 A double bottom is just simply the opposite, which can be thought of sometimes as a W pattern. 00:41.980 --> 00:48.510 Markets fall to a specific level, bounce a bit, come back down, find buyers again and then turns 00:48.520 --> 00:49.990 around now. 00:51.260 --> 00:57.710 It should be noted that it doesn't have to be the exact same price you're looking for something close. 00:57.920 --> 01:03.230 There's no real rule, as it were, you know, like in Forex, you wouldn't say it has to be within 01:03.230 --> 01:08.190 three PED's, basically just looking for a general double, top or bottom. 01:08.870 --> 01:11.690 So let's take a look at a couple of examples. 01:12.950 --> 01:19.610 You'll see them all the time as a very common but in Bitcoin here on the half hour chart, you can see 01:19.610 --> 01:21.020 that we made a top here. 01:21.510 --> 01:24.840 We pulled back, we made a top here, and then we fell. 01:25.160 --> 01:27.030 So that is a double top. 01:27.050 --> 01:30.890 Now, how do you use this information for your trading? 01:30.920 --> 01:33.400 Well, there's a couple of different ways you can do that. 01:33.770 --> 01:36.450 You can put a sell order at the bottom. 01:36.470 --> 01:40.700 That's typically how it's used and then put a stop loss on the other side. 01:41.930 --> 01:42.950 You can do that. 01:42.950 --> 01:46.880 Or if you want to tighten it up, put your stop loss about halfway through the pattern. 01:47.540 --> 01:53.660 You're looking to at least capture the same distance from the top to the bottom. 01:54.950 --> 01:56.410 Much like a head and shoulders pattern. 01:57.050 --> 02:00.440 But a lot of people will even go two times. 02:00.440 --> 02:01.610 So two times a hide. 02:03.040 --> 02:10.150 Especially if it's with the longer term trend, you can see clearly that happen in Manero, I have an 02:10.150 --> 02:16.810 example of a double bottom and what's particularly telling about this is. 02:18.620 --> 02:26.360 That it is in an area that had been important previously, it had been in uptrend and then we pulled 02:26.360 --> 02:26.940 back. 02:26.960 --> 02:33.680 So this is even more important because this is a continuation sign in general. 02:34.040 --> 02:35.930 You want to trade with the trend if you can. 02:36.200 --> 02:41.510 But these are also important signals that perhaps we're going to get a trend change depending on what's 02:41.510 --> 02:42.000 going on. 02:42.020 --> 02:43.880 Obviously, you can look at a chart here. 02:44.390 --> 02:45.860 You can see how it worked out. 02:46.490 --> 02:50.610 But trading in the the moment is an entirely different situation. 02:51.050 --> 02:56.570 So, for example, at this point, we would have been in an uptrend. 02:56.580 --> 03:02.180 So it makes sense that more often than not, this double bottom pattern is going to hold in, send the 03:02.180 --> 03:07.160 market higher to simple observation on the four hour chart. 03:07.520 --> 03:12.260 As you can see, these double tops and double bottoms offer nice signals. 03:12.260 --> 03:13.880 They offer a nice measuring stick. 03:14.210 --> 03:24.230 In this video, I've shown a couple of nice little signals here, and there was a nice measuring stick 03:24.230 --> 03:24.770 built in. 03:24.770 --> 03:26.890 And that's one of the beauties of these patterns. 03:27.170 --> 03:29.330 Beyond that, they're very obvious. 03:31.410 --> 03:37.860 We have a continuation of the uptrend, if you remember that that was the one that we were looking at. 03:38.460 --> 03:39.270 Go ahead, show. 03:40.170 --> 03:42.900 So here's the 20 M.A. 03:44.670 --> 03:51.840 Notice how once we filled this out, we had formed this W pattern, we also had broken above the 20 03:51.840 --> 03:55.120 and then used it as support on the move higher. 03:55.710 --> 03:58.530 So these are all things that could come into play. 03:58.920 --> 04:05.770 Furthermore, there was some recent support there as well at a round number in the form of eighty dollars. 04:06.420 --> 04:08.270 None of this happens in a vacuum. 04:08.760 --> 04:14.720 You can see that I have taken a very basic shape and then I've added a few other things to it. 04:14.730 --> 04:16.220 Very basic stuff. 04:16.230 --> 04:17.330 This isn't magic. 04:17.340 --> 04:21.600 This isn't something that takes a ton of thought or calculation. 04:21.840 --> 04:29.370 You just notice that, hey, somebody that is trading support and the 20 M.A both got a signal and we 04:29.370 --> 04:30.510 got this pattern. 04:30.930 --> 04:34.130 So there's at least three groups of traders that are willing to be involved. 04:34.140 --> 04:36.840 Plus it was already with the trend in this case. 04:37.140 --> 04:40.110 So longer term trend, traders would have been paying attention. 04:40.530 --> 04:45.030 In the next video, I'll take a look at rectangle tops and bottoms.