Forex in My Free Newsletter Packed with Actionable Tips and Strategies To Get Your Trading Profitable. If prices were truly random, why do they pause so frequently at just those points? Draw a line from the first top or bottom to the Bollinger Band. So pay attention to the price action in the middle of the pattern. How to set your target in a double top and double bottom trade.
Trading with double bottoms is exactly same as with double tops. Also it is more likely if the second high is higher than the first, because the market will probably try to retest the higher high until it puts in a lower high. If prices go above this level then we can consider that we were wrong. Then you would trade the pattern in the direction of the breakout. Although the pattern is fairly easy to recognize and can be traded using a basic set of rules, you cannot simply jump into a trade whenever you see two bottoms or tops on the chart. If you have a Double Bottom pattern, you will wait for a bullish breakout for your confirmation. This creates at bull surge in prices at profit target. If the second top is higher than the first then there is one additional piece of criteria that is required and that I shall explain later.
The second top may be slightly lower or slightly higher or at the exact level as the first top. Often the move upwards is quite strong and there is almost a vacuum in prices as the market makes it back to near the previous high or slightly beyond. Adventurous traders can look to take partial profits at 1:1 risk to reward and then let the second part of their trade run as a swing bernard arnaud crypto monnaie trade hoping to get 2, 3 or 4 times their risk. But risk control in trading should be achieved through proper position size, not stops. The optimal place to put your stop loss order is just above the second top of the Double Top reversal pattern. Sometimes however we dont always get what we want and prices behave in a way that we wouldnt have expected. The Double Top is a mirror image of the Double Bottom pattern: The Double Top starts with a bullish trend, which turns into a sideways movement.