What is the Pipe Top pattern?

Two adjacent, long, upward-pointing spikes that look like parallel pipes. Signals a strong bearish reversal at the end of an uptrend.

How reliable is the Pipe Top pattern?

The Pipe Top is a reversal pattern with a bearish bias. Reliability is highest when confirmed with volume and on higher timeframes (H4 and Daily). Like all technical patterns, it should be used in conjunction with other analysis tools and proper risk management rather than in isolation.

How do I trade the Pipe Top pattern?

To trade the Pipe Top pattern: first identify the pattern on your chart and wait for confirmation (such as a breakout candle closing beyond the key level with increased volume). Enter the trade in the direction of the breakout, place your stop-loss beyond the pattern's extreme point, and set your take-profit using a measured move equal to the pattern's height. Always use proper position sizing and never risk more than 1–2% of your account per trade.

Is this the same as a Double Top?

No. A Double Top takes much longer to form. A Pipe Top consists of just two adjacent bars.

What if the pipes are different colors?

The color (bullish/bearish) is less important than the length and the rejection of the highs.

Pipe Top Pattern: Complete Trading Guide & Strategy

Pipe Top: The Ultimate Guide for CFD Traders

Updated: 2026-02-27 · Education-only (not investment advice)

Introduction: The Double Spike Collapse

In technical analysis, the Pipe Top is a highly reliable and visually striking bearish reversal pattern. It consists of two adjacent, long, upward-pointing price bars (or "pipes") that stand out from the surrounding price action. This pattern signals that the bulls have made a final, desperate attempt to push the price higher, only to be met by overwhelming selling pressure.

For CFD traders, the Pipe Top is one of the most effective patterns for catching market tops. It represents a "bull trap" or a "liquidity grab" where buyers are lured in at the highs before a massive collapse. In this masterclass, we will learn how to identify these "pipes" and how to trade the subsequent bearish plunge.

Pattern type: Reversal (bearish)

The Anatomy of a Pipe Top

A textbook Pipe Top consists of the following:

Two Long Spikes: Two adjacent price bars that are significantly longer than the surrounding bars.
Upward Pointing: Both bars have long upper shadows or are long bullish candles that close near their highs.
Parallel Appearance: The two bars should be of similar length and sit side-by-side, resembling a pair of pipes.
Location: The pattern must occur after a significant uptrend to be considered a reversal signal.

Market Psychology: The Bull Trap

The psychology of a Pipe Top is one of extreme euphoria followed by immediate reality check:

First Pipe: The first long bar represents a wave of aggressive buying. Bulls are in full control, and it looks like the uptrend is accelerating into a "blow-off top."
Second Pipe: The second bar tries to follow through, but sellers step in aggressively. The price may hit a new high but then crashes back down, or it may simply mirror the first bar's length.
The Rejection: The fact that the price could not stay at the new highs shows that the bulls are exhausted and that the "smart money" is distributing their positions to late-coming retail buyers.

Volume Analysis: The Distribution Signature

Volume is a critical confirmation for the Pipe Top:

High Volume: Both "pipes" should ideally be accompanied by high volume, signaling a buying climax and heavy distribution.
Increasing Volume: If the second pipe has higher volume than the first, it shows even stronger rejection of the higher prices.

Identification Checklist

Context: Must occur at the end of an uptrend.
Length: The pipes must be noticeably longer than the previous 10-20 bars.
Overlap: The two pipes should overlap significantly in their price range.

Figure 2: Professional MT4 setup for trading the Pipe Top pattern with technical indicators.

MT4/MT5 Execution & Technical Setup

To trade the Pipe Top effectively on MetaTrader, follow this professional workflow:

Candlestick Chart: Use a candlestick chart to clearly see the long shadows or bodies.
The Entry: The safest entry is a sell stop just below the low of the second pipe.
Confirmation: Look for a bearish candle closing below the pattern's low.

Risk Management for CFD Traders

Stop Loss Placement: Place your stop-loss above the highest point of the two pipes.
Take Profit: The target is often the next major support level or a measured move based on the height of the pipes.

Real-World Example: Trading the Pipe Top

A Pipe Top formed on the EUR/USD daily chart after a multi-month rally. Two massive bullish candles appeared side-by-side, reaching a multi-year high, but the price immediately reversed and broke below their lows. This led to a sustained downtrend that lasted for several months.

Traders who recognized the "pipes" were able to exit their longs and enter shorts with a tight stop, capturing a major market turn at the very top.

Conclusion: The Analyst's Verdict

The Pipe Top is a "warning" from the market. It tells you that the bulls have reached their limit and that the bears are taking over. By identifying these dramatic spikes and waiting for the breakdown below the lows, you can avoid being trapped at the top and profit from the inevitable reversal.

Common Mistakes to Avoid

Ignoring the Trend: Trying to trade a Pipe Top in a sideways market. It must follow a clear uptrend.
Entering Too Early: Shorting before the price breaks below the low of the pattern.

Disclaimer

This content is for education only and does not constitute financial advice. CFDs are leveraged products and carry a high risk of loss. Always use a stop-loss and trade responsibly.

Pipe Top