Reversal Bitcoin Chart Patterns - Double Tops and Double Bottoms Bitcoin Patterns

Reversal chart patterns are formed after the market price has had an extended move up or down and the price reaches a strong resistance level or support level respectively.

When price reaches such a point it starts to form a chart pattern - reversal chart pattern. Since these chart formations are frequently formed it is easy to spot them once you learn how to spot them and start using them.

There are four types of reversal chart patterns:

• Double Top
• Double Bottoms
• Head & shoulders
• Reverse Head and shoulders

This tutorial will only cover double tops and double bottoms chart patterns, the other 2 will be covered in the next tutorial: head and shoulders and reverse head and shoulders chart pattern.

Double Top - Reversal Pattern

This double tops chart pattern is a reversal pattern setup that's formed after an extended up-wards market trend. As its name implies, this formation is made up of 2 consecutive peaks that are roughly equal, with a moderate trough between.

This double tops formation is considered complete once price makes second peak & then penetrates lowest point between highs, called the neckline. The technical sell signal from this reversal pattern formation occurs when the market breaks-out below the neckline.

In Bitcoin trading, this formation is used as an early warning signal that a bullish Bitcoin price trend is about to reverse. However, it's only confirmed once the neck line is broken & the market moves below neckline. Neckline is just another term for the last support level formed on the Bitcoin price chart.

Summary:Forms after an extended price move upwards

This formation indicates that there will be a reversal in market price direction

We sell when price breaks below the neckline: see below for explanation.

Double Top Reversal Pattern - Bitcoin Trading

Example 2: Double Tops Reversal Pattern

Double Top Reversal Pattern - Bitcoin Trading

The double tops reversal chart pattern look like an M Shape, the best reversal signal is where the second top is lower than the first one as shown below, this means that the reversal signal can be confirmed by drawing a downwards trend line as shown below. If one opens a sell trade the stop loss will be placed just above this downward trend-line.

M Shaped Double Tops Reversal Chart Pattern - Downwards Trend-Line

Double Bottom - Reversal Pattern

Double bottom is a reversal chart pattern that forms after an extended down-wards trend. It is made up of 2 consecutive troughs that are roughly equal, with a moderate peak between.

This double bottom reversal chart pattern is considered complete once price makes second low & then penetrates highest point between lows, called the neckline. The buy indication from this bottoming out signal occurs when the market breaks-out the neckline to the upside.

In Bitcoin trading, this formation is an early warning signal that the bearish Bitcoin price trend is about to reverse. It is only considered complete/confirmed once the neckline is broken to the upside. In this formation the neck line is the resistance area for the price. Once this resistance level is broken the market will move up.

Summary:Forms after an extended move downwards

This formation indicates that there will be a reversal in market trend

We buy when price breaks above the neckline: see below for explanation.

Double Bottom Reversal Pattern - Bitcoin Trading

Example 2: Double Bottoms Reversal Pattern - Bitcoin Trading

Double Bottom Reversal Pattern - Bitcoin Trading

The double bottom chart pattern looks like a W Shape, the best reversal signal is where the second bottom is higher than the first one as shown below, this means that the reversal can be confirmed by drawing an up-wards trend-line as shown below. If a trader opens a buy trade the stop loss will be placed just below this upwards trend line.

W Shaped Double Bottoms Reversal Pattern - Upwards Trendline