Chart School / Recognizing Patterns
Double tops and necklines
Lesson 9 of 14 · about 1 min read, plus practice · Glossary
A proposed double top starts with a prior advance, then two peaks near a resistance area separated by a trough. That intermediate trough defines the neckline. Two similar peaks alone leave the pattern incomplete. Chart readers often look for a later close below the neckline as proposed confirmation, with the rule defined in advance. Even that break can fail. Peak spacing and similarity are subjective, and the pattern does not determine a reliable price target or probability of success.
Worked fictional example
Fictional River advances from $80 to $100, falls to $90, revisits $99 and later closes at $87. The $90 trough is the neckline; the close at $87 supports the breakdown interpretation under a close-below rule.
Dashed orange line: neckline at $90
On a small screen, scroll the chart horizontally to read every label.
Observation order / daily periods →
Chart walk-through is ready.
Accessible data table and chart description
Separate fictional daily OHLCV illustration for Double tops and necklines. Hollow body: close at or above open; filled body: close below open. Table provides exact values.
| Date UTC | Open | High | Low | Close | Volume |
|---|---|---|---|---|---|
| 2024-01-01 | 80 | 81 | 79 | 80 | 100 |
| 2024-01-02 | 80 | 91 | 79 | 90 | 120 |
| 2024-01-03 | 90 | 101 | 89 | 100 | 0 |
| 2024-01-04 | 100 | 101 | 89 | 90 | 160 |
| 2024-01-05 | 90 | 100 | 89 | 99 | 180 |
| 2024-01-06 | 99 | 100 | 93 | 94 | 200 |
| 2024-01-07 | 94 | 95 | 86 | 87 | 220 |
Legend: hollow body = close ≥ open; filled blue body = close < open. Wick = low to high. Direction is also readable from the table, without color.
What could invalidate this interpretation?
A recovery above the neckline, especially followed by a new high, weakens or defeats that proposed reversal.
A counterexample
Two peaks near $100 with every subsequent close above $90 remain an incomplete setup. The price may resume rising.
Check your understanding
Further learning
Original FinanceFD explanations and drawings. For additional context, see Fidelity’s overview of technical analysis, Fidelity’s RSI guide and Investor.gov’s investing introduction.
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