M pattern on the chart: when does the trend reverse?

If you've ever seen two identical peaks in a cryptocurrency chart one after the other — this could be a signal for a reversal. The pattern is called “Double Top” (M-pattern), and traders love it because it warns of a price drop.

What does this formation look like?

Imagine: the price rose to a level of, say, $50, then fell to $45, then tried to rise to $50 again but couldn't. This is the M-pattern. The second peak is usually slightly lower than the first — this means that buyers are losing strength. When the price breaks below the level $45 , the pattern is considered confirmed.

Step by Step: How to Trade on This Pattern

Step 1: Wait for the breakout Watch for the price to break the support level ( and the neckline between the two peaks ) downwards. This should be accompanied by an increase in trading volume — this is important!

Step 2: Open Short When the breakout is confirmed, it's time to enter a short position. But don't rush — false breakouts happen often.

Step 3: Protect Yourself Set a stop-loss above the last peak. If the price closes there, the trade was false — it's better to exit with minimal losses.

Step 4: Calculate the target price It's simple: measure the distance from the top to the neckline and project it down from the breakout point. In our example: $50 - $45 = $5. If the breakout occurred at $45, the target is $40.

Pros and Cons

✅ Clear geometry – easy to determine entry and exit levels ✅ Reliable trend reversal — one of the most credible signals ✅ Low risk with the right strategy

❌ False breakouts can drain capital ❌ On small timeframes, it often triggers incorrectly. ❌ Subjectivity — different traders see the pattern differently

Final

M-pattern is not magic, but just an attempt by large players to push the price back. Remember: never trade more than 1-2% of your capital on a single trade. And don't forget about the news — they can break any pattern.