Stocks & Commodities V. 27:9 (56-57): Tops And Bottoms by Alexander Sabodin

Stocks & Commodities V. 27:9 (56-57): Tops And Bottoms by Alexander Sabodin
Item# V27C09-175SABO
Availability: In Stock

Product Description

Tops And Bottoms by Alexander Sabodin

How do you know if the market has formed a top or a bottom? Here we look at the double-top and double-bottom patterns that occur frequently in the markets.

When head & shoulders, double-top/bottom, and triple-top/bottom patterns are discussed, youíll find that they are referred to as trend reversal patterns. A triple top or bottom is rarer but is really just a version of the head & shoulders pattern. The main difference between the two is that all three peaks (or three troughs) of a triple top or bottom are located at almost the same level. In the event there are two peaks (or troughs), itís referred to as a double top (or double bottom), respectively.

Often, youíll find technical analysts having differing opinions about the type of price pattern thatís formed. Some may say itís a head & shoulders pattern, while others may call it a triple top. This argument is academic, because at the core, both price models are virtually the same.

A famous satirist remarked that a woman once asked him why chicken bouillon cubes are called cubes, when they are really parallelepipeds. That sounds funny, doesnít it? When it comes to price patterns, the situation is quite similar. As technical analysts, our challenge lies in understanding the core of the price models and the way we can profit from them, regardless of what the price model is called.


I will consider the features of these models using the double top as an example, since this reversal model occurs most frequently. Please refer to the weekly chart of the Eur/Usd in Figure 1. In an ascending trend, what happens is that price establishes a new maximum (point A). This is usually accompanied by an increase in trading volume. Then there is usually an intermediate fall (point B) with declining volume. So far, everything has gone as you would expect in a typical rising trend.

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at users can view the S&C Digital Edition in the subscriber's section on

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order