Double top

Double top

A term used in technical analysis to refer to the rise of a stock's price, a drop, and then a rise back to the same level as the original rise.

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double top In technical analysis, a chart formation indicating stock price resistance level and characterized by a stock price reaching a single high price on two different occasions. The price level represented by the double top becomes a resistance level through which the stock will later have difficulty breaking below. Compare double bottom.

double top

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Double top. Double top is a term that technical analysts use to describe a stock price pattern that, when depicted on a chart, shows two gains to the same dollar level separated by a price drop.

For example, if a stock that had been trading at about $28 a share rose to $35, dropped back to trade at about $28 for several weeks, and then rose to $35 again, analysts would identify $35 as a double top.

An analyst observing this pattern might conclude that investors were comfortable paying $35 for the stock, and that the price might not rise above that level in the near term. In technical terms, the analyst would say that there was resistance above that price. However, there's no way to predict whether the price would in fact remain at $35 or gain value and hit new a high.