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Options Made Easy: Your Guide to Profitable Trading, Second Edition by Guy Cohen

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Double and Triple Tops and Bottoms

Double Tops and Triple Tops

A Double Top is where a high is reached twice before dropping down. In logical terms, the chart is telling us that the (stock) price did not have the strength to rise through a previous high. This is interpreted as weakness and imminent decline in the price is likely.

Let’s take a look at our NASDAQ chart again because it’s the Double Top with the peaks in mid-July and the end of August that is screaming at us as we look at the chart:

Chart 4.2.1. Double Top for NASDAQ (July–August 2000).

TC2000®.com. Courtesy of Worden Brothers Inc.

  • Notice how the second ...

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