Double top
A bearish break: price closes under the dip between two similar highs.
Double top looks for two highs of similar height with a dip between them, then marks the bar where price closes below that dip. The first high is the top over N bars that ended N bars ago, and the second is the top over the last N/2 bars. The dip is the lowest low over the N/2 bars ending N/4 bars back, and it must sit at least the tolerance below the first high.
How to read it
- Markers sit on the candle where the close breaks below the dip, after two similar highs.
- Read a marker as a short-window bearish break, not a confirmed reversal.
- At default settings a month of SPY one-minute bars produced no markers, so loosen the tolerance to see any.
What it outputs
- Double top break
- Marks the first bar where price closes below the dip between two similar highs.
When it fires
The first bar where the two highs match within the tolerance, the dip sits at least that far below the first high, and the close breaks under the dip's low. Read it as a bearish break after a double-top shape, not a confirmed reversal.
Settings
- Max Distance
- Sets the window in bars for the two highs and the dip. Shorter confines the pattern to a few minutes. Longer lets the highs sit farther apart, and how often it fires does not rise in a steady way.
- Price Tolerance
- Fraction of price (0.02 = 2%). Limits how far apart the two highs can be and how far the dip must sit below the first high. Lower fires far more: 0.3% gave 36 signals in the sample, 2% gave none.
Pitfalls
- At default settings it never fired on a month of SPY one-minute bars: the dip must sit 2% below a high 20 to 40 minutes earlier, a move SPY rarely makes intraday.
- Lookback is labelled max distance, but the two highs can sit between about half and twice that many bars apart.
- Very low tolerance floods the chart: 0.1% marked about 13 times a day in the sample, too many to act on one by one.