The Strategy of Trading on the Figure “Double Top”

It is not necessary to use indicators to perform effective technical analysis, a clear chart initially contains the most important information. Thus, there are many reversal patterns that can be easily detected by the naked eye even by novice traders. In this article we will look at a very powerful trading strategyThe basis of which is a figure of tehanalysis called “double top” and “double bottom”.

Pattern Review

The essence is in the name of the figure. The price reaches a certain resistance level, which is followed by a pullback to levels of supportThe letter “M” is formed in this way, and then it rises again to its original value and then sinks again. Thus, something similar to the letter “M” is formed. The appearance of such pattern in the vast majority of cases precedes a trend reversal with a significant price decrease. If the pattern is clearly outlined and has a correct shape, the passability of the signals is very high.

The signal to enter the market is a breakdown of the lower support level, where the letter “M” stands. If this has happened, we should expect the beginning of a downtrend. Usually the price passes a distance that is at least equal to the height of the pattern itself.

The mirror reflection of the considered pattern is a similar figure – “double bottom”. It resembles an inverted letter “M”, i.e. – “W”. It is formed during the reversal of the downtrend. The rules for entering the market are identical. The option “Up” is purchased when the candle closes above the upper resistance level.

Expiration rules are standard – from 4 to 5 candles. This is the optimal interval. If you use pipe options, you can analyze the intervals of 15 seconds and 1 minute. In that case, the duration of trades should be equal to either 60 seconds or 5 minutes. If the timeframe of the chart is 5 minutes, then you should use binary options with a duration of 20 – 30 minutes.

Example of trading on a real deposit

Trading was conducted on a small interval of 15 seconds. Therefore, on the platform Binomo broker Or, for example, Pocket OptionThe asset CRYPTO IDX was chosen, it has a high volatility, providing a complete formation of candles in a small time interval. On the chart marked a pattern of “double top”, which, in turn, also consists of two patterns of the top and a bottom. The price behavior in the picture below is marked with green arrows.

Immediately after the close of the candle below the support level, an option of $10 was bought. Expiration is 4 candles, everything is standard.

The pattern fully met expectations. As predicted, the price has traveled a distance equal to the height of the pattern. For a visual comparison it is shown in the picture. Traders should take this feature of this pattern into account when trading.

Conclusion

The accuracy of trading using this method increases on longer intervals. The optimal choice is the timeframe M1. In this case, the passability of signals increases significantly, and there is no need to spend hours in front of the monitor waiting for the formation of the desired pattern.