Triple Top Figure
This pattern is a continuation of the Double Top. However, instead of breaking through the support line, the price reverses and forms a third peak. Then the scenario repeats - the market breaks the Neckline and gives a signal to open a short position.
A Triple top forms after an active uptrend. Since the chart starts to move inside the sideways channel, it becomes clear that the bulls have weakened. The sentiment on the market will soon change to bearish.
Triple Top Figure
Let's take a look at the chart above:
- The price forms three peaks where we draw the resistance line (green dots)
- The support level (or neckline) is plotted along two troughs between the peaks (blue dots)
- Open a sell trade after the pair breaks through the support level (black dot)
- The market often returns to retest the neckline. Once it bounces back you can open a second short position (yellow dot)
As a rule, the price moves down the distance equal to the height of the peaks. You can set your exit point there.
Triple Bottom Figure
As you can imagine, this pattern mirrors the Triple Top. It forms after a bearish trend. It all starts with the formation of two descending peaks and the appearance of a Double Bottom. However, when the market should work out the pattern and break through the resistance, the price bounces down again and draws a third peak.
As the bears are no longer able to break through an important support level, it is clear that the market is moving into bulls' hands. The trend will change to an upward trend. If you have open short positions, close them.
Triple Bottom Figure
Let's look at the chart again:
- After a downtrend, the price returns three times to the same level and forms the main support level (green dots)
- On two highs between three troughs (blue points), we build a resistance level (neckline)
- The price moves in a sideways channel. After the third low, the bulls gain the upper hand and break the resistance level (black dot). That’s where you open your long position.
- As with the rest of the patterns, price can retest the neckline (yellow dot), which will now become the support. Open a second buy trade after the price bounces up again.
Signal Confirmation
For the Triple Top and Triple Bottom, use the same tools as for other reversal patterns:
- Use candlestick patterns for tracking reverse points while forming the pattern itself. They can help you a lot to understand that a Double Top or Bottom is turning into a Triple one. It becomes clear if one of the candlestick reversal patterns forms in the area of the Neckline (for example, doji, hammer, engulfing, morning or evening star, etc.)
- Use volume indicators and oscillators to confirm a major trend reversal.
That's all for Triple Top and Triple Bottom. Ready to try it?