Reversal chart patterns: double top, double bottom, head and shoulders

What is a reversal pattern, and why does it matter?

A reversal pattern is not a prediction — it is a description of repeated behaviour: price reaches a level and finds enough sellers (or buyers) there to turn it away twice or more. Its value is that it produces a measurable level — the neckline or confirmation level — so you get an explicit entry and an explicit invalidation point instead of a feeling.

Double top and double bottom

A double top is two highs at a similar price separated by a clear pullback. The engine treats it as a candidate when the two highs sit within a narrow band relative to the period's volatility, and when the trough between them is deeper than a set threshold. A double bottom is the exact mirror image.

double top                        double bottom
    A        B                     neckline
    /\      /\                  ──────────────
   /  \    /  \                    \      /
──/────\──/────\── neckline         \    /
        \/                           \  /  \  /
      trough                          A      B

confirm: close below neckline     confirm: close above neckline
invalidate: new high above B      invalidate: new low below B

• ▸Level proximity: the gap between the two highs is small relative to volatility, not a fixed number — a pattern on an asset moving 4% a day is not the same as one moving 0.4%.
• ▸Pullback depth: the trough between them must be clear; otherwise the move is noise, not a pattern.
• ▸Confirmation: a candle close below the neckline for a double top, above it for a double bottom. Before that, the pattern is only a candidate.
• ▸Measured target: the pattern height projected from the neckline — a risk reference, not a promise.

Head and shoulders, and the inverse

Head and shoulders is three highs: the middle one (the head) higher than the two shoulders, which sit at a similar height. The engine scores it higher the more symmetric the shoulders are and the more the head genuinely stands out. The inverse version appears at the end of a downtrend as three lows with the middle one deepest.

How the engine detects patterns on your device

1. 1The engine scans only the visible window, so cost scales with what you see, not with the full series length.
2. 2It extracts local highs and lows with a minimum spacing between them to avoid duplicates.
3. 3It measures level proximity, pullback depth and symmetry, then converts them into a confidence score from 0 to 100%.
4. 4Confirmed patterns are drawn over the candles with their neckline and score, refreshed every frame.

Common mistakes when using patterns

• ▸Entering before confirmation: unconfirmed patterns fail often, especially on short crypto timeframes.
• ▸Ignoring volatility: the same shape on a one-minute chart carries far less information than on a daily one.
• ▸Ignoring context: a reversal pattern inside a strong trend is usually a pause, not a turn.
• ▸Trusting the score alone: it measures geometric quality of the shape, not probability of profit.