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The double top pattern consists of two peaks that reach a similar price level, separated by a trough or a temporary decline. This pattern typically signifies a shift in market sentiment, indicating the exhaustion of bullish momentum and a potential trend reversal from bullish to bearish. By recognizing the double top pattern early, traders can position themselves strategically to take advantage of the impending downward movement.

Formation and Characteristics:

A double top pattern usually emerges after a prolonged uptrend. The first peak, or the left shoulder, represents the highest point of the upward move. Following this peak, the price retraces, forming a trough known as the neckline. The subsequent rally forms the right shoulder,