Who this entry is for — Two nearly equal highs separated by a trough (or the mirror image on the lows): the chartist calls it a double top and distrusts it. The model shows it is the head and shoulders' twin — only the phase changes.
Source: J. M. Hurst, The Profit Magic of Stock Transaction Timing, Prentice-Hall, 1970 — Chapter 3, About Double Tops and Bottoms (p. 57, Figs. III-6/III-7).
The phase experiment
In plain words — Take the exact ingredients of the head and shoulders. Shift the short wave's lows slightly in time. Sum again: out comes a double top. Not another phenomenon: another costume.
The book's experiment is disarmingly simple. Hurst takes the segment of components that produced the head and shoulders and draws a cyclicality "in every way identical to the one marked A, except that the position of each low is shifted slightly in time". Summing as before, the result is a double top — "yet another charting favourite".
The conclusion is verbatim: whether a head and shoulders or a double top forms — and even whether the neckline slopes up, down or sits flat — "is dependent only upon the time relationship between two cyclic components". The same reasoning holds for inverted head and shoulders and double bottoms.
The full family: "V" turns too
In the same family the book places "V" tops and bottoms: they occur when an intermediate cycle turns in perfect time synchronization with the next longer component — and the point grows sharper the more short cycles turn at the same instant. Four or five aligned components produce the most dramatic "V"s on charts.
Example — Your stock prints two nearly identical highs a month apart. The chartist says "double top — careful below the middle low". The model adds the why: the monthly cycle's two crests rode the top of a longer cycle that is now falling — the same information as the neckline break, without waiting for it.
Warning — None of the three costumes (head and shoulders, double top, "V") is more or less "reliable" than the others: the cause is the same turn of the long cycle. What changes is only how synchronized the short crests were with the top.
Summary card
| Pattern | Phase condition |
|---|---|
| Head and shoulders | Short crest near the long top, the others either side |
| Double top | Two short crests symmetric about the top |
| "V" | Intermediate and long cycle turn in perfect sync |
| Mirrors (inv. H&S, double bottom) | Same mechanisms on the lows |
Links
- Head and shoulders: the cyclic origin — the twin
- Triangles and cyclic analysis — the other mechanism
- Chart pattern verification — Chapter 3's framework
- Hurst tradition — chapter index