What it means
To an SMC trader, the twin highs are also buy-side liquidity that may get swept first.
In practice
A double top shows buyers failing twice at the same price. The pattern is only complete when price closes below the low between the two peaks; until then it is a range. Traders often project the height of the pattern down from that neckline as a first target.
A second peak that fails with less momentum than the first adds weight to the reversal idea.
What to watch for
Shorting the second touch before the neckline breaks is trading a guess. Equal highs are also an obvious pool of stops, so price frequently pokes above both peaks before the real decline starts.
Related terms
3 terms- Head and shouldersThree peaks with the middle one highest; a close through the neckline completes the reversal.
- Equal highs and lowsTwo or more highs (or lows) at almost the same price: an obvious pool of stops that tends to get taken.
- Measured moveA rough target that projects a pattern's height from its breakout point.