![]() However, it might work better to trade confirmation of the double top and enter at F (a close below the blue line). I show that in this example as red line E. The pattern confirms as a valid one when price closes below the lowest valley between the two peaks. The four peaks need to form a resistance barrier to an upward rise. This one has four peaks, ABCD, which is the minimum required for the pattern. This is an example of a nice looking multi-peak chart pattern. The pattern confirms when price closes below the lowest valley between the four peaks. The vast majority (70%) will return to stop somewhere above the bottom of the pattern but below the middle.Ī trend change (20% or more drop) happens only 31% of the time. The middle of the pattern but remain below the price of the pattern's top. Two percent of the patterns will see price rise above the top of the pattern on its way from the breakout to the ultimate low. Price reaches the target 54% of the time, so be conservative in your assessment. The four tops) and subtract it from the price of the lowest valley (B) to get a target (C). Take the height of the pattern from A to B (highest peak to lowest valley between Some variants (2B type) performed better. As long as the multi-peak obeyed these guidelines then I accepted Other patterns like ascending/descending triangles or broadening patterns were ignored. A rectangle top can be a multi-peak pattern if it has four or more peaks, but a multi-peak pattern may not be a rectangle (because the bottomĬan be an irregular shape). ![]() ![]() I don't count multi-peak patterns if they were head-and-shoulders tops or included a pronounced 2B pattern. Rising/falling or heavy breakout volume have no influence on performance. Price confirms the pattern and stages a downward breakout when it closes below the bottom of the pattern (the lowest low between the four peaks). No minimum, but major peaks I looked at were separated by at least a week. No peak should soar above the others (as in the head of a head-and-shoulders top) Must have at least four peaks near the same price. Ignore overshoot and ignore the patternĪ flat top pattern with an irregular (or not) bottom. The trend start (intermediate-term uptrend 3 to 6 months) must be below the bottom of the multi-peak.
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