When the graphic pattern of the twin roof or twin floor appears, it means that the trend has started to change or reverse.
Twin roof pattern
The twin roof is a reversible pattern that forms after a continuous upward or upward movement.
“Roofs” are peaks that are formed when the price reaches a certain level if these levels are not broken.
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After hitting this level, the price will react slightly to it and return from it, but then come back to test this level again.
If the price reacts again and returns from that level, this is where you have a twin ceiling !
How to trade twin floor pattern and twin ceiling pattern?
In the chart above you can see that two peaks or two “roofs” are formed after a strong upward movement.
Notice how the second peak failed to break the roof of the first peak.
This is a strong sign that a reversal is imminent as it tells us that the buying pressure is almost over.
On the twin roof, we place our entry order below the neckline because we anticipate and expect an uptrend.
How to trade twin floor pattern and twin ceiling pattern?
Oops! Maybe we are floor planners! As it seems, we are always right!
Looking at the chart, you can see that the price has broken the neckline and has moved well downwards.
Remember that twin roofs are a trend reversal, so you should look for these after a strong uptrend.
You will also notice that the amount of fall is approximately equal to the height of the twin roof structure.
Keep this in mind as it will be useful in determining the profit margin.
Twin floor pattern
The twin floor pattern is also a trend reversal, but this time we are looking to buy, not sell.
This arrangement occurs after a continuous downward trend when two valleys or two “floors” are formed.
How to trade twin floor pattern and twin ceiling pattern?
In the chart above, you can see that after the previous downtrend, the price has formed two valleys because it has not been able to go below a certain level.
Notice how the second floor was not able to break the first floor significantly.
This is a sign that the selling pressure is almost over and the trend is about to reverse.
How to trade twin floor pattern and twin ceiling pattern?
look!
The price has broken the neckline and has moved nicely upwards.
See how the price has gone up by almost the same height as the twin floor makeup!
Remember, just like a twin roof, a twin floor is a trend backdrop.
You should look for such items after a strong downtrend.
Stop Loss in the twin ceiling and floor pattern
There is disagreement about where to place the Stop Loss twin roof pattern. It is common for traders to place the stop above the lower ceiling. In this way, your profit margin and loss limit are almost equal. In other words, the risk to your ratio will be 1: 1.
Some professional traders, however, do not accept this method. According to them, the risk ratio to Rivard 1: 1 is not suitable considering that the accuracy of this pattern is about 65% to 70%. In addition, even this ratio will be less than 1, because you pay spreads and put a few pip stops above the ceiling.
The solution for this group of traders is to look for a smaller wave or an indicator candle between the ceiling and the neckline and put your loss limit above it. If you do not find such a wave or candle, you can place the stop loss halfway between the ceiling and the neck.
In this way, your loss limit will be closer to your entry point and your trade will have a more appropriate profit-loss ratio.
Do the opposite for the twin floors.
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