Double roof

Double roof

A double roof is a graphic pattern of change of trend that forms at the end of a long upward trend. The ceilings are peaks that form after the price reaches a certain level that cannot be exceeded.

After arriving at that level, the price will bounce a little, but then again reach this level of resistance. If the price bounces back at that level, a double roof is formed.

[caption id="attachment_738" align="aligncenter" width="219"] Double roof[/caption]

In the chart above you can see two peaks formed after a strong upward movement. Notice how the second peak was not able to break the level so high that it made the first peak.

This is a strong sign that the price is going to turn around, because we are saying that the pressure of purchase has just finished.

With a ceiling cap, we can place a pending order under the bottom bracket, because we are anticipating that the price will end up dropping.

[caption id="attachment_739" align="aligncenter" width="306"] Double roof[/caption]

Looking at the graph above we can see how the price breaks the stand and makes a strong downward movement.

Remember that double roof is a typical pattern of change of trend. If you analyze several past charts on your trading platform, you will surely find some double ceilings as the end of a strong upward trend.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.