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Step 2: Improve Attention to Detail (Extended Double Tops)

by Erik Grywalski

Note:  The historical stock example given below is for EDUCATIONAL USE ONLY.  It is NOT to be used to make buy/sell decisions in today's market.  For more information, please read the HSR Terms of Use.

An Extended Double Top is a topping behavior that occurs after a stock has already made a large move higher (at least a doubling of price) in a short amount of time (less than 1 year).

The price action unfolds in four (4) Steps:

Step 1:  Sharp Move Up

A stock breaks out of a base and has a sharp move higher (not many pullbacks) that keeps the majority of investors out of the move.

Step 2:  Price Correction

Price breaks lower and shakes out some investors.

Step 3:  Rally to New High

After finding a low, price reverses and goes back to new high ground.

Step 4:  Failure and Rollover

Price fails to hold above Step 1's high and rolls over or trades sideways as "dead money".

Note:  Steps 2 and 3 may feature a sharp break lower that's followed by a fast move back to new highs.

Historical Stock Chart Example:  Amazon.com 1999

Click to enlarge

Please >>CLICK HERE<< for the historical chart examples of Extended Double Tops.

Please >>CLICK HERE<< to go to 1st Swing Point High Tops.