Double Top and Bottom Validator
A second test of the range high is a double top if it looks like one, and most don't. Enter the 2 peaks, the trough between them, how many bars apart they are and the range, and the validator scores the pattern against the shape rules from Bulkowski's Encyclopedia of Chart Patterns (2000): peaks close to level, a trough deep enough to be a swing, enough bars between them to be 2 visits and not 1, and the second peak inside the range edge zone. The verdict comes with the neckline, the entry at the second test, the stop past the higher peak and the targets. Bulkowski wrote the rules in percent of price for daily charts; here they're in percent of the range and in bars, which is the convention that moves with your timeframe.
Peaks are the wick highs (or lows). The trough is the lowest low (or highest high) between them. The last close tells the validator whether the second test has started to turn.
No verdict yet
Enter the range, the 2 peaks, the trough and the bars between. The score updates as you type.
How it scores. 100 points across 5 shape checks. Peak match, 30: the 2 peaks within 5% of the range height of each other scores full, within 10% scores half, further scores 0. Trough depth, 25: the trough at least 25% of the range height below the peaks scores full, 15% scores half; shallower and it's 1 wide top, not 2. Separation, 20: 5 to 40 bars between the peaks scores full, 3 to 4 or 41 to 60 scores half. Edge location, 15: the second peak inside the top 15% of the range scores full, top 25% scores half. Turn, 10: the last close at least 0.3 ATR below the second peak (it's turning), half marks at 0.15 ATR. Valid at 70 or more with the peak match at full and the trough scoring at least half. 45 to 69 is a shape that needs the neckline break to be trusted. Under 45 is not a double top. Plan at a valid pattern: entry at the last close, stop 0.25 ATR above the higher peak, T1 the trough (the neckline), T2 the range midpoint. Bulkowski's confirmation is the close below the neckline and his measured move is the pattern height projected below it; both are shown for the break case. Mirror everything for a double bottom. Keyboard: 1 to 3 load the examples.
Educational tool only, not financial advice. Bulkowski's own numbers put double tops failing about 1 time in 8 before confirmation and often more after. A valid shape is a place to look for a rejection bar, not a reason to skip one.
Built by Jason Parker, founder of Trading Ranges.
Built by Jason Parker, founder of Trading Ranges.