Double Top & Double Bottom Patterns

The Double Top is a bearish reversal pattern that forms when price reaches a resistance level twice and fails to break through on the second attempt. The pattern resembles the letter 'M' and signals that buying momentum is exhausting. The confirmation point occurs when price breaks below the support level between the two tops (the 'neckline'). The target is equal to the distance from the tops to the neckline, projected downward from the break.

The Double Bottom is the bullish counterpart, forming when price tests a support level twice and bounces higher on the second test. This pattern resembles the letter 'W' and indicates that selling pressure is diminishing. Confirmation comes when price breaks above the resistance level between the two bottoms. Double bottoms in gold often appear at significant round-number support levels and can precede substantial rallies.

Variations include triple tops and triple bottoms, where price tests the same level three times before reversing. These are less common but generally more powerful due to the extended period of distribution (triple top) or accumulation (triple bottom). When trading these patterns in gold, it is essential to wait for the neckline break confirmation rather than anticipating the reversal, as many apparent double tops or bottoms are actually continuation patterns within a larger trend.