Bitcoin double top pattern is a common market trend indicator that is easy to identify. Just like other trading patterns, this indicator symbolizes traders. Let's explore more in this article.
How to identify double top?
Two consecutive rounding tops that create a "M"-shaped pattern are known as double tops. A double top is a bearish reversal indicator that typically appears following a long bull run. The first top has an upside-down "U" shape that bounces off the neckline and attempts to form another "U" shape, completing the "W" shape pattern.
Typically, the second top is a little bit lower than the first one, showing early resistance and purchasing exhaustion. Indicating a bearish
This time, the price action will break the support of the neckline and continue to fall.
How to trade with Bitcoin double top?
When to enter?
Analyze the market's condition; a double top is typically not a fakeout when the bull run is coming to an end.
Traders should recognize a double top pattern and note the neckline and size of the tops after assessing the state of the market.
Traders might open a short position at the support when the price action is retesting since the price movement can occasionally retest after breaking out from the "support turned resistance."
When not to enter?
In shorter time periods (less than an hour), a double top is typically a fakeout and is to be avoided. It is most likely a double top if there is a significant amount of time and distance between the two tops.
In a strong market uptrend, a double top could probably be a fakeout, therefore, avoid a short position from the top.
Some tips while trading with double top
Since there is some volatility involved with trading with assets like Bitcoin and other cryptocurrencies, always use Dollar Cost Averaging (DCA).
In order to prevent loss or liquidation in the event of a fakeout, Bitcoin traders should only enter a short position after it breaks out of the trendline.
Always have a stop loss right above the initial local resistance above the neckline.
Hopefully, reading this article, "Bitcoin Double Top Pattern: How To Trade With Bitcoin Double Top?" can help you to understand it better.
