Thank you so much Tiger_Academy for explaining the key characteristics of the stock chart pattern - Double Top Pattern which is one of the stock analysis which investors could use to study the stock before making any trading decision.
Stock chart patterns are lines and shapes drawn onto price charts to help predict forthcoming price actions, such as breakouts and reversals. They are a fundamental technical analysis technique that helps traders use past price actions as a guide for potential future market movements.
Double tops are one of the important technical analysis patterns used by traders.
Double top is a chart pattern that occur when the underlying investment moves in a similar pattern to the letter "M" (double top) which means the stock price has hit a top twice before continuing the downward trend which indicates a bearish price movement.
Trading double tops can be a great way for traders to potentially earn large profits, but it is important to understand the risks involved when pursuing this strategy. Double top formation is highly effective when identified correctly. However, they can be extremely detrimental when they are interpreted incorrectly. Therefore, we must be extremely careful and patient before jumping to conclusions.
Out of the 3 figures shown in the article, Figure 1 is the correct chart pattern of Double Top pattern as shown below.
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