Forex Trading - What is a double top and double bottom?
Question:
http://the-forex-trading.blogspot.com...
Do you agree with it?
Answer:
DOUBLE TOP term used in technical analysis to describe the rise of a stock, a drop, another rise to the same level as the original rise, and finally another drop. ///The double top looks like the letter "M". The twice touched high is considered a resistance level.
DOUBLE BOTTOM A charting pattern used in technical analysis. It describes the drop of a stock (or index), a rebound, another drop to the same (or similar) level as the original drop, and finally another rebound//The double bottom looks like the letter "W". The twice touched low is considered a support level.
Most technical analysts believe that the advance off of the first bottom should be 10-20%. The second bottom should form within 3-4% of the previous low, and volume on the ensuing advance should increase.
I suggest you go right to the source..cause there are some charts that will help you understand this theory better :D Good Luck.
Mia
A double top or double bottom in charting are technical analysis terms. They attempt to describe a reversal in price (double top is bearish - price falls, double bottom is bullish - price rises). I wouldn't put much credence in technical analysis of securities alone, it would have to be backed up by fundamentals, and macroeconomic factors.
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