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Rick

Double Top

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Double Top

A reversal pattern whereby a top is formed on high volume, followed by a correction of at least fifteen percent, subsequently followed by a second top (within three percent of the first) on lower volume. Tops should be at least a month apart, and the reversal is confirmed when the second correction crosses the valley of the first correction.

This is a weekly chart of Adobe Systems where directly following the double-top pattern was a fifty percent drop in price over the next four months. It meets the technical specifications of a double-top pattern, including a second top formed several months after the first at a slightly lower price on volume (5 million) that was substantially less than the volume on the first top. The valley between the tops formed after a greater than fifteen percent drop in price.

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