Trend Reversal formations

Double Top

• Happens after an extended uptrend.
• Formed by 2 peaks that can’t break a certain level. This level becomes a resistance line.
• Place our short entry order below the low point of the valley in between the 2 peaks.

Double Bottom

• Happens after an extended downtrend.
• Formed by 2 valleys that can’t break a certain level. This level becomes a support line.
• Place our long entry order above the high point of the peak in between the 2 valleys.

Head and Shoulders

• Happens after an extended uptrend.
• Formed by a peak, followed by a higher peak, and then another lower peak. A neckline is formed by connecting the low points of the two troughs or “valleys”.
• Place your short entry order below the neckline.
• We calculate our target by measuring the distance between the high point of the head and the neckline. This is the approximate distance that the price will move after it breaks the neckline.

Reverse Head and Shoulders

• Happens after an extended downtrend.
• Formed by a valley, followed by a lower valley, and then another higher valley. A neckline is formed by connecting the high points of the 2 peaks.
• Place your long entry order above the neckline.
• We calculate our target by measuring the distance between the low point of the head and the neckline. This is the approximate distance that the price will move after it breaks the neckline.