In this video, we're going to talk about double tops and double bottoms, and these are simple, yet
effective ways to look at the marketplace in order to find a potential reversal.
These are also known as W and M patterns.
And I'll show you why here in a moment.
A double top is simply one, it sounds like, when Price tries to rally to the same place twice and
it is up for me to top.
This is also called and impacter for obvious reasons.
A double bottom is just simply the opposite, which can be thought of sometimes as a W pattern.
Markets fall to a specific level, bounce a bit, come back down, find buyers again and then turns
around now.
It should be noted that it doesn't have to be the exact same price you're looking for something close.
There's no real rule, as it were, you know, like in Forex, you wouldn't say it has to be within
three PED's, basically just looking for a general double, top or bottom.
So let's take a look at a couple of examples.
You'll see them all the time as a very common but in Bitcoin here on the half hour chart, you can see
that we made a top here.
We pulled back, we made a top here, and then we fell.
So that is a double top.
Now, how do you use this information for your trading?
Well, there's a couple of different ways you can do that.
You can put a sell order at the bottom.
That's typically how it's used and then put a stop loss on the other side.
You can do that.
Or if you want to tighten it up, put your stop loss about halfway through the pattern.
You're looking to at least capture the same distance from the top to the bottom.
Much like a head and shoulders pattern.
But a lot of people will even go two times.
So two times a hide.
Especially if it's with the longer term trend, you can see clearly that happen in Manero, I have an
example of a double bottom and what's particularly telling about this is.
That it is in an area that had been important previously, it had been in uptrend and then we pulled
back.
So this is even more important because this is a continuation sign in general.
You want to trade with the trend if you can.
But these are also important signals that perhaps we're going to get a trend change depending on what's
going on.
Obviously, you can look at a chart here.
You can see how it worked out.
But trading in the the moment is an entirely different situation.
So, for example, at this point, we would have been in an uptrend.
So it makes sense that more often than not, this double bottom pattern is going to hold in, send the
market higher to simple observation on the four hour chart.
As you can see, these double tops and double bottoms offer nice signals.
They offer a nice measuring stick.
In this video, I've shown a couple of nice little signals here, and there was a nice measuring stick
built in.
And that's one of the beauties of these patterns.
Beyond that, they're very obvious.
We have a continuation of the uptrend, if you remember that that was the one that we were looking at.
Go ahead, show.
So here's the 20 M.A.
Notice how once we filled this out, we had formed this W pattern, we also had broken above the 20
and then used it as support on the move higher.
So these are all things that could come into play.
Furthermore, there was some recent support there as well at a round number in the form of eighty dollars.
None of this happens in a vacuum.
You can see that I have taken a very basic shape and then I've added a few other things to it.
Very basic stuff.
This isn't magic.
This isn't something that takes a ton of thought or calculation.
You just notice that, hey, somebody that is trading support and the 20 M.A both got a signal and we
got this pattern.
So there's at least three groups of traders that are willing to be involved.
Plus it was already with the trend in this case.
So longer term trend, traders would have been paying attention.
In the next video, I'll take a look at rectangle tops and bottoms.