Two turns are a clue. The middle is the test.

Start before the first peak

Suppose an illustrative share's daily closes have climbed for several weeks from about ₹92 to ₹120. That earlier rise matters: a reversal needs a move to reverse. The price then falls to ₹108, rises to ₹119, and eases back to ₹112. There are now two highs near the same area, separated by a real decline. The drawing resembles an M.

What do you actually know? The second attempt did not move far beyond the first high. You do not know why people traded there, whether a large seller waited at ₹120, or whether the uptrend is over. At ₹112, price is still above the ₹108 low between the highs. Call this a possible double top, not a completed reversal.

That middle low is the level to watch. Many chart readers call it the neckline. In this example we choose a rule before seeing the next day: a completed daily close below ₹108 counts as a break. A brief trade below ₹108 that closes back above it would not meet this particular rule. Other rules exist; changing the rule after seeing the outcome would make the pattern look more reliable than it was.

Turn the picture upside down

A double bottom asks the mirrored question after a decline. In a separate illustrative history, daily closes fall from about ₹126 to ₹80, rise to ₹92, return near the first low at ₹81, and climb to ₹89. The two lows make a W-like outline. The middle high, ₹92, is the boundary. Until the price closes above it under the rule chosen for this example, the chart shows a possible double bottom, not a confirmed upward reversal.

If the next completed close is ₹94, the ₹92 boundary has been crossed. That confirms the pattern definition we chose; it does not confirm that the share will keep rising. If price instead falls through ₹80, the possible bottom failed. The same discipline applies to the top: a close below ₹108 completes the defined top, while a move above ₹120 leaves the old rise alive. A third visit may produce a range or a triple pattern, which the next lesson treats.

Why a neat M or W can mislead

Use this reading when the chart has a clear earlier rise or fall, two meaningfully separated tests of roughly the same area, and a visible middle low or high. The peaks or troughs do not need to be identical. Zerodha Varsity's historical Cairn India chart, for example, shows a proposed double top with highs around ₹336 and ₹332. Exact symmetry would be an artificial requirement. But two adjacent candles touching the same price are not enough: the move between tests must be substantial enough to define a boundary on the timeframe you chose.

Avoid calling every M or W a reversal. In a sideways range there may be no prior trend to reverse. A stock can recover from its second low without clearing the middle high, or break a boundary and then move straight back. A close beyond the line is an observation, not a promise that the break will hold. You may compare volume with recent comparable sessions, as in 04.05.02, but volume is missing from the line chart here and cannot be inferred from its shape.

This chart also misses the path inside each day. For an actual review, check the same symbol and timeframe on an OHLC chart, use completed bars, verify adjustments and session settings, and mark the boundary before viewing later prices. Do not derive an entry, stop or target from this drawing alone; those decisions need a separate risk plan. The measured-move convention and its limits belong to 07.05.03.