Double Top question

Discussion in 'Technical Analysis' started by TraderNewb, Feb 21, 2007.

  1. Hi, I have a question when shorting a stock after it made a double top and broke through the valley low. Where do you place your stop-loss? Thanks for your help!
  2. Depends on the price action you see on your chart.

    Are you going to post the chart?

  3. Technically the stop would be above the peaks, however you can find tighter stops depending on how price broke through the valley low.
  4. BenChi


    if it crosses back above the 'valley' low, then the original reason for putting on the trade is no longer valid (it is no longer a double top) so you might consider getting out if this condition is met...

    a more important question to ask yourself is why in the world should you think this pattern has any predictive value - and i cannot emphasize this point strongly enough.

    ...a lot of technical analysis is akin to folklore or wives tales...

    if you attempt to short the double top in the current market environment, you are very likely to have your head handed to you, just as i did when i was starting out (i was attempting to short after double tops).

    good luck to you,

  5. Not sure on how to post the chart, but the stock is AMGN.

    Are you saying double tops are not good indicators that a stock is going lower?
  6. BSAM


    What timeframe are you looking at?
  7. Double top failure rate is 65% according to bulkowski. Head and shoulders is 5%.

  8. Combine a double top with a 2B reversal and you have something much more powerful.
  9. The daily, but it's also on the weekly
  10. BSAM


    Here ya go:
    #10     Feb 21, 2007