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!
Technically the stop would be above the peaks, however you can find tighter stops depending on how price broke through the valley low.
if it crosses back above the 'valley' low, then the original reason for putting on the trade is no longer valid (it is no longer a double top) so you might consider getting out if this condition is met...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, ben
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?