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The Double Top is a bearish reversal pattern made of two consecutive peaks that are roughly equal, with a price drop between those two peaks. The level to which the price drops to is called a Neckline. The double top is a frequent price pattern at the end of a bull market. The pattern is complete and confirmed when the price falls below the Neckline, indicating that further price decline is imminent or highly likely.
The time between the two peaks is also an important factor whether a double top pattern exists or not. If the tops appear at the same level but are very close in time, then the probability is high that they are part of a consolidation and the original trend will resume.
Volume is another indicator for interpreting this formation. Price reaches the first peak on increased volume then falls down to the neckline with low volume. The second attempt on the second peak should be on a lower volume.
