WEBVTT 00:03.200 --> 00:04.660 And this video we're going to take a look at. 00:04.660 --> 00:06.420 Double tops and double bottoms. 00:06.550 --> 00:14.380 And as it sounds like a double top is two times hitting the top or a double bottom is two times hitting 00:14.380 --> 00:15.360 the bottom. 00:15.730 --> 00:20.410 Simply a price that the market can't get through in either direction. 00:20.410 --> 00:29.800 Sometimes you'll hear them referred to as M and W patterns they're very prominent and important signals 00:29.800 --> 00:36.290 once you get them they don't have to be to the point didn't have to be the exact same price but you 00:36.290 --> 00:40.000 want them close they are reversal signals. 00:40.000 --> 00:45.620 This is a bearish reversal signal showing that we can't get above this level here and this is bullish. 00:45.620 --> 00:52.910 So looking at the chart you can see clearly that we had been breaking down and there's two areas here 00:52.970 --> 00:58.720 on Johnson and Johnson on the daily chart right around I'd say around 110 111. 00:58.820 --> 01:03.730 The market can't break above and that's a good sign that the buyers are going to take over again. 01:03.770 --> 01:07.190 You can play this a couple of different ways. 01:07.260 --> 01:09.660 This is an w that I had mentioned previously. 01:09.660 --> 01:13.320 Some people will wait for a break of the W. 01:13.330 --> 01:16.040 Now that's an extraordinarily cautious way to play. 01:16.320 --> 01:21.150 But the idea is you can extrapolate this is one 11 to 120. 01:21.150 --> 01:23.550 That's a nine dollar move. 01:23.580 --> 01:25.660 So you're looking to hit 129. 01:25.730 --> 01:33.510 And that's exactly where we go to right off the bat however I prefer to play it as such. 01:33.510 --> 01:38.490 I see the double bottom and as soon as I see it break what would be the middle of the W I go along there 01:39.750 --> 01:45.810 I still wait to see if we break out above there and once we do I still extrapolate the same move as 01:45.810 --> 01:49.650 if I had gone long on a break of the W. 01:49.650 --> 01:55.770 This gives you in this case an extra say three or four dollars on the trade which can make quite a bit 01:55.770 --> 02:00.810 of difference on one hundred shares three or four hundred dollars or a thousand three or four thousand 02:00.810 --> 02:01.550 dollars. 02:01.590 --> 02:02.960 That type of thing. 02:03.120 --> 02:12.550 So that is an example of a double bottom over here we have a double top and it works the same way. 02:12.570 --> 02:15.830 You can see that clearly in Wayfair fair on the daily chart. 02:15.840 --> 02:18.160 We could not get above 150 dollars. 02:18.210 --> 02:23.590 I like this trade a lot because 150 is such an important psychologically large number. 02:23.730 --> 02:30.630 You can see that we do have the M pattern here and right at the 130 level you would have broken the 02:30.630 --> 02:32.490 bottom of that M pattern. 02:32.490 --> 02:38.270 So you're looking for a move down to 1 10 because it is 20 dollars. 02:38.490 --> 02:46.740 Now this particular M pattern there is no early entry because the bottom comes all the way down. 02:46.800 --> 02:54.760 So unlike the other one which flipped over as an M would look probably more like this and you could 02:54.760 --> 03:01.330 enter there you actually had to wait till there is a nice easy move it's 20 dollars it's very obvious 03:02.080 --> 03:06.670 once you've shorted you know you put your stop somewhere in about the middle of it because either it 03:06.670 --> 03:07.570 works or it doesn't. 03:07.900 --> 03:13.390 And then once you get some profit you can lock your position down to a break even scenario you hit your 03:13.390 --> 03:21.160 target very easy obviously these are very important signals higher timeframes mean more than shorter 03:21.160 --> 03:26.570 time frame to keep that mind that's true with almost everything technical analysis related anyways and 03:26.590 --> 03:32.080 it is a very profitable way to trade when you get these signals because they don't happen all the time 03:32.110 --> 03:37.900 especially when they are at such obvious large figures like one hundred fifty dollars.