Trading Double Tops is a stratergy used by most traders, both forex and binary options, and traded properly it can be profitable, and patience being the key.

The essence of the double tops stratergy is that the asset price will touch and try to break through the support or resistance line from a previous high and after two or three attempts it will more than likley reverse leaving you with a double tops set up on your chart. (similar to the one pictured above ). Although sometimes it might only have one attempt at breaching the resistance line from the previous high and leave you with a pin bar ( I talked about this in an earlier article “Identifying and trading a pin bar ) as a good sign of a reversal, possibly letting you take an earlier PUT trade.

Senario:

The asset price is trending upward  on a five minute chart, toward the resistance line that you would have placed on your chart at the previous high and away from the support line that you would have place on your chart at the latest low. The asset price has now been rejected at the resistance line from the previous high and is now heading back down toward the bullish support line ( neck line ). The neck line has now been breached and the candle closed under this line, the next candle is bearish and closes lower than the previous candle,this would be the confirmation candle to place a PUT trade for fifteen minutes at the close of the confirmation candle.

For those of you that are a little more adventurous you could take a five minute PUT trade at the close of the first candle that was originally rejected at the resistance line,especilly if tis was apin bar, or if you want to be a bit more cautious you could wait for a confirmation candle to follow the candle that was rejected at the resistance line and place a five minute or a fifteen minute PUT trade at the close of confirmation candle.

As always try this stratergy out on your demo account before trading it on your live account.

Happy trading.

 

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