1998issue C011-7
Double-top confirmation before the measured move
Twin peaks near the same high are only a candidate double top. Confirmation requires a later decline through the lowest low of the valley between them, and the classic measured move then projects that peak-to-trough height again, or a smaller retrace to where the prior rise began.
- Twin peaks near the same high are only a candidate until price later declines through the lowest low of the valley between them.
- Peak-separation and center-trough depth are identification filters, not proof of a reversal. Near-equal highs that never break the valley remain unconfirmed.
- Because the breakout is the trough break, a large share of the pattern's decline has already occurred before the setup becomes a reversal signal.
- After confirmation, the measured move projects at least the peak-to-trough height again, or a retrace to where the prior rise began, whichever is smaller.
A candidate until the trough breaks
Twin peaks near the same high are only a candidate double top. Confirmation requires a later decline through the lowest low of the valley between them. That later decline through the intervening trough after the second peak is the breakout.
A valid double top is treated as forming after an advance, not during a decline or near a market bottom. Two near-equal highs that fail to fall through the intervening valley after the second peak remain unconfirmed and are not counted as completed double tops.
Filters identify the setup, not the reversal
Peak-separation describes how close the two highs sit in price and how far apart they sit in time. Those conditions are identification filters rather than proof of a reversal.
Identification filters used in the source include peak-to-peak closeness of about 2% in a computer model versus 3% in the classic definition, a two-week minimum separation in tests versus a one-month classic minimum, and a center-trough decline of at least 10% in the model versus about 15% to 20% in the classic definition.
Classic volume guidance prefers heavier activity on the first peak than on the second, but the computer model did not require a volume pattern as a selection rule.
The measured move starts after confirmation
The center-trough is the valley between the two peaks. Its depth and later breach define both validity and target distance. Because confirmation is the trough break, a large share of the pattern's decline has already occurred before the setup becomes a tradable reversal signal.
The classic measured-move rule projects at least the peak-to-trough height again after the trough break, or a retrace to the price level where the prior rise began, whichever is smaller.
The source reports that after confirmation, more than 80% of the formations continued lower, declining an additional 18% on average in less than three months.
All readings on this track · 12 readings
- 1990Constructing volume-budget targets after a breakout
- 1991Constructing price objectives from measured moves and swings
- 1997Measuring chart pattern height for breakout targets
- 1998Double-top confirmation before the measured move
- 1998Writing entry, target, and trail as one procedure
- 2005Constructing flag and pennant measured moves
- 2006The swing rule as a measured move beyond a broken barrier
- 2011Prove the X7 turn before measuring the reversal
- 2014Constructing an intraday flag breakout as one procedure
- 2017Price mirrors as a fold-test for reversal targets
- 2017First swing box as a measured-move exit ruler
- 2020The recovered swing high as a halfway-reaction checkpoint