Double top


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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. The pattern looks like the letter M. In technical analysis, this pattern is interpreted negatively suggesting that there is some resistance level (top of the M) whereby the stock can't go higher.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Double Top

A situation in which a security's price peaks, drops back down, then peaks again at the same price as before. For example, a stock may rise to $30 per share, drop to $27, then rise back to $30. A double top is useful in identifying a resistance level, which is a price above which a security has difficulty rising. This, in turn, can be helpful in finding buy signals and sell signals.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

double top

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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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