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In this video, we're going to talk about double tops and double bottoms, and these are simple, yet
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effective ways to look at the marketplace in order to find a potential reversal.
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These are also known as W and M patterns.
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And I'll show you why here in a moment.
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A double top is simply one, it sounds like, when Price tries to rally to the same place twice and
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it is up for me to top.
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This is also called and impacter for obvious reasons.
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A double bottom is just simply the opposite, which can be thought of sometimes as a W pattern.
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Markets fall to a specific level, bounce a bit, come back down, find buyers again and then turns
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around now.
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It should be noted that it doesn't have to be the exact same price you're looking for something close.
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There's no real rule, as it were, you know, like in Forex, you wouldn't say it has to be within
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three PED's, basically just looking for a general double, top or bottom.
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So let's take a look at a couple of examples.
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You'll see them all the time as a very common but in Bitcoin here on the half hour chart, you can see
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that we made a top here.
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We pulled back, we made a top here, and then we fell.
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So that is a double top.
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Now, how do you use this information for your trading?
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Well, there's a couple of different ways you can do that.
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You can put a sell order at the bottom.
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That's typically how it's used and then put a stop loss on the other side.
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You can do that.
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Or if you want to tighten it up, put your stop loss about halfway through the pattern.
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You're looking to at least capture the same distance from the top to the bottom.
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Much like a head and shoulders pattern.
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But a lot of people will even go two times.
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So two times a hide.
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Especially if it's with the longer term trend, you can see clearly that happen in Manero, I have an
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example of a double bottom and what's particularly telling about this is.
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That it is in an area that had been important previously, it had been in uptrend and then we pulled
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back.
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So this is even more important because this is a continuation sign in general.
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You want to trade with the trend if you can.
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But these are also important signals that perhaps we're going to get a trend change depending on what's
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going on.
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Obviously, you can look at a chart here.
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You can see how it worked out.
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But trading in the the moment is an entirely different situation.
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So, for example, at this point, we would have been in an uptrend.
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So it makes sense that more often than not, this double bottom pattern is going to hold in, send the
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market higher to simple observation on the four hour chart.
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As you can see, these double tops and double bottoms offer nice signals.
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They offer a nice measuring stick.
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In this video, I've shown a couple of nice little signals here, and there was a nice measuring stick
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built in.
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And that's one of the beauties of these patterns.
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Beyond that, they're very obvious.
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We have a continuation of the uptrend, if you remember that that was the one that we were looking at.
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Go ahead, show.
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So here's the 20 M.A.
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Notice how once we filled this out, we had formed this W pattern, we also had broken above the 20
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and then used it as support on the move higher.
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So these are all things that could come into play.
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Furthermore, there was some recent support there as well at a round number in the form of eighty dollars.
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None of this happens in a vacuum.
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You can see that I have taken a very basic shape and then I've added a few other things to it.
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Very basic stuff.
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This isn't magic.
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This isn't something that takes a ton of thought or calculation.
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You just notice that, hey, somebody that is trading support and the 20 M.A both got a signal and we
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got this pattern.
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So there's at least three groups of traders that are willing to be involved.
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Plus it was already with the trend in this case.
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So longer term trend, traders would have been paying attention.
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In the next video, I'll take a look at rectangle tops and bottoms.
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