A double top is two peaks at roughly the same price with a dip between them - the market tried to break higher twice and failed. A double bottom is the mirror: two lows that held, signaling buyers defended a level twice. Both are reversal patterns built on the idea that a level tested and rejected twice is significant.
Why the second test matters
The first rejection at a resistance level could be random. The second failure at the same price says the sellers are still there and the buyers couldn't push through - momentum is fading. The pattern "completes" when price breaks the intervening low (double top) or high (double bottom), confirming the shift.
The confirmation line
Traders wait for the break of the "neckline" - the low between the two tops, or the high between the two bottoms - before acting. Jumping in on the second peak alone is guessing; the tape hasn't confirmed the reversal yet. Volume on the confirming break adds conviction.
One rejection is noise. Two at the same price is the market telling you where it won't go.
Where it fits
Double tops and bottoms are most reliable at meaningful levels - prior-day highs/lows, VWAP, high-volume nodes - not at random prices. A double top into a wall of resistance with fading momentum is a real setup; the same shape mid-range is noise. As always, the level and the regime decide whether the pattern means anything.
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