As of 10/11/2019
  Indus: 26,817 +319.92 +1.2%  
  Trans: 10,292 +224.65 +2.2%  
  Utils: 867 -5.54 -0.6%  
  Nasdaq: 8,057 +106.26 +1.3%  
  S&P 500: 2,970 +32.14 +1.1%  
YTD
 +15.0%  
 +12.2%  
 +21.6%  
 +21.4%  
 +18.5%  
  Targets    Overview: 09/30/2019  
  Up arrow27,600 or 25,600 by 10/15/2019
  Up arrow11,100 or 9,700 by 10/15/2019
  Up arrow900 or 850 by 10/15/2019
  Up arrow8,300 or 7,700 by 10/15/2019
  Down arrow2,825 or 3,050 by 10/15/2019
As of 10/11/2019
  Indus: 26,817 +319.92 +1.2%  
  Trans: 10,292 +224.65 +2.2%  
  Utils: 867 -5.54 -0.6%  
  Nasdaq: 8,057 +106.26 +1.3%  
  S&P 500: 2,970 +32.14 +1.1%  
YTD
 +15.0%  
 +12.2%  
 +21.6%  
 +21.4%  
 +18.5%  
  Targets    Overview: 09/30/2019  
  Up arrow27,600 or 25,600 by 10/15/2019
  Up arrow11,100 or 9,700 by 10/15/2019
  Up arrow900 or 850 by 10/15/2019
  Up arrow8,300 or 7,700 by 10/15/2019
  Down arrow2,825 or 3,050 by 10/15/2019

Bulkowski's Double Top Study

 

My book, Swing and Day TradingSwing and Day Trading: Evolution of a Trader book., has swing and day trading techniques and setups that may interest you.

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-- Tom Bulkowski

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This page describes a study using double tops that showed the time to decline after a double top (CD in the figure below) is similar to the rise (AB) leading to the chart pattern.

Summary
Details
Identification Guidelines
Example
See Also

The double top chart pattern setup

This is the same information as the Double Top Setup but without the trading implications.

Double Top Study: Summary

When trying to measure how long it will take a stock to reach the launch price after confirmation (the CD move in the above figure), the time to rise from A to B is a good approximation.

Double Top Study: Details

I conducted a study to discover how long it takes price to return to the launch point after a confirmed double top. If you trade options, knowing how quickly price will hit a target is vital.

Referring to the above picture, I examined 1,333 double tops from 1/1990 to 6/2006 in 317 stocks and found 309 that looked like the picture. A flat base or congestion region preceded the double top. Then price moved up in a straight-line run (AB) to the double top. The double top appeared and confirmed when price closed below the valley between the two peaks (the red line at C). Then, price returned to the launch price (D).

I measured the time to rise from the trend start at A to the peak at B and compared it to the decline from confirmation, C, to the launch price, D.

The AB move took an average of 24 days. The CD move took an average of 19 days. This is perhaps not surprising because the distances are shorter, that is, CD is shorter than AB on a price basis. But, we are measuring time. I chose the confirmation point because that's when a twin peak becomes a true double top and that's the sell signal for a stock holding or the time you buy a put option.

When trying to measure how long it will take a stock to reach the launch price after confirmation (the CD move in the above figure), the time to rise from A to B is a good approximation.

Top of page More

Double Top Study: Identification Guidelines

This is not an easy pattern to identify in an emerging price trend nor is it plentiful. Here is what to look for.

Double Top Study: Example

Double top setup example

The chart on the right shows an example of an Adam & Adam double top chart pattern. The flat base is not clear on this chart, but it lasted over a month. Since this stock has a wide daily trading range, the base also shows large price swings. In that regard, the chart is not a perfect example.

The rise from A (the launch point that begins the straight-line run up) to B (the top of the first peak in the double top) takes 16 days. Price confirms the double top chart pattern at C. The decline from C (the confirmation point) to D (the low closest to the launch price), is 15 days.

-- Thomas Bulkowski

 

 

Top of page More

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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