| ign="center"> | | | | is to put in some checks and balances for any trading |
| So what does a double top or a double bottom | | | | indicator. Bollinger bands are commonly used to put in |
| mean on a stock chart? It is one of the most | | | | price stops to limit losses should the support or |
| fundamental chart patterns that can be interpreted | | | | resistance indicated not hold. |
| with a great degree of accuracy. A double top or | | | | Bollinger bands are named after John Bollinger. |
| bottom is simply when a stock's price hits the same | | | | Bollinger is a highly regarded technician of the stock |
| high or low twice at the same level. It usually | | | | market. These bands act as a sort of channel for |
| indicates strong support or resistance for a stock | | | | stocks to work there way through. Bollinger bands |
| depending if it is a high or a low. | | | | are very accurate in predicting a stock charts |
| If it is a double top this leads to strong resistance. | | | | behavior. Stock prices rarely lie outside these bands |
| If it is a double bottom this leads to a strong area of | | | | for more than a day or two. This may happen when |
| support. | | | | some big news comes out on a stock such as a bad |
| One thing to keep in mind is the duration of the | | | | earning report or an analyst downgrade or upgrade. |
| stock chart you are looking at. A double top on an | | | | If you combine the use of double tops and double |
| intra-day chart does have a different meaning than a | | | | bottoms in combination with Bollinger bands and some |
| double top on a yearly chart. One must use the | | | | common sense, you will do very well in the stock |
| appropriate chart depending on ones trading horizon. | | | | market. Use them to consistently pick winning trades. |
| A trader who like to hold for long periods would not | | | | David Petersen has been an active day and swing |
| in general us an intra-day chart. A day trader will | | | | trader in the stock and bond market for over 20+ |
| focus more on the short term chart, but must also | | | | years now. David also authors several websites |
| keep in mind long term support and resistance as | | | | including How to Trade Stocks and Stock Market |
| they are considered more robust. Another key point | | | | Predictions. Have a blessed day! |