Formal figures

Double tops and double bottoms The preceding figures are all related to trend lines so as to delimit them. Still, other figures exist, called formal figures, which are defined by their sole appearance. They then are reversal figures: the stock trend is reversing on these levels. The most significant of these figures is the double top (on the upside) and the double bottom (on the downside). As shown below, these formations correspond to two consecutive tops (or bottoms). These figures are often characterized by lower volumes during the second extreme, showing the decreasing interest of investors and the expectation of a trend reversal. In terms of target, it can be found by moving the height of the double top (or bottom) figure itself at the level of the end of the figure (cf. graph). From this figure head-and-shoulders is derived. This expression comes from the form of the figure, showing three consecutive tops, the first one and the third one being of the same height while the second