The simple double top chart pattern forex trading strategy is a price action forex trading system based on the forex double top pattern.
The double top pattern is a bearish chart reversal pattern that forms in a market uptrend.
When it forms, it indicates that the market uptrend may be changing to a downtrend.
Which Currency Pairs To Trade?
You can trade any mt4 currency pair with this trading system.
Which Timeframes To Trade?
We suggest you use a 15-minute mt4 timeframe and upwards.
Any Other Forex Indicators Required?
You don’t need to make hard things by using forex indicators. No need.
Example of Double Top Chart Pattern
Here’s an example of a forex double top chart pattern:
- as you can see, the price was in a market uptrend until the double top chart formed and then it turned down.
- What is important is that the first top and top two should be around the same height.
Double Top Pattern Forex Trading Strategy Rules
The rules of the forex double top chart pattern forex trading strategy are straightforward:
- Place a sell stop order when you see a chart bearish reversal candlestick form on top 2.
- Place your stop loss(SL) 2-5 pops above the high of that bearish reversal candlestick pattern.
- For take profit(TP), you can use previous chart swing lows as your take profit(TP) levels, or if not, calculate your take profit target based on the 1:3 risk to reward ratio. For example, if your stop-loss(SL) is 20 pips, your profit target must be 60 pips.
Advantages of the Double Top Pattern Forex Trading Strategy
- This forex trading system has an excellent risk: reward(R:R) ratio for trades that work out as anticipated.
- Price moves downward tend to go a huge amount of pips, sometimes even to the thousands if you are trading from the larger mt4 timeframe like that daily, so if you trailing stop your trade, you have the potential to capture these kinds of market moves if you do not get stopped out too quickly.
- The use of chart bearish reversal candlesticks will help you better sell trade entries.
Disadvantages of The Double Top Chart Pattern Forex Trading Strategy
- Price spikes tend to happen around the chart top 2 zones, and if your stop-loss(SL) is not far away enough, you may get stopped out prematurely.
- Beginner forex traders may take a bit of time to know if a double top chart pattern is forming or not.
Read More: How to Trade Forex DOUBLE BOTTOM PATTERN