A triple top is a reversal pattern that is less common than the double top. It looks like this:
Triple bottoms are bullish reversal chart patterns, which means if found in a downtrend and this pattern starts to form and once the neckline is broken and price head up, this confirms that the trend is up.
Here’s another example of a triple bottom shown below:
How to Trade The Triple Bottoms
- Many traders wait until the neckline is broken and trade the initial breakout.
- Others will wait for a retest of the broken neckline to enter a buy order once they see a bullish reversal candlestick…
- I prefer to take trades on the 3rd bottom by watching the price action. If I see a bullish reversal candlestick pattern, I buy. Why do I do that? Well, if price goes up and breaks the neckline and goes upward, I would be in a lot more profit than if I bought the breakout of the neckline.
Profit taking methods would be similar to double bottom chart pattern mentioned previously…
The Triple Top Chart Pattern
Triple tops are the opposite of triple bottoms and they are bearish chart patterns. They rarely occur but its good to know what they look like.
Triple tops when found in an uptrend, it signals the end of the uptrend when the neckline is broken and price heads down.
How To Trade The Triple Top Chart Pattern
- Some conservative traders wait for the neckline to be broken to trade that breakout.
- Some will most likely wait for retest of neckline and then sell.
- I prefer to take trades on Peak 3 and if the trade breaks the neckline and goes all the way down, I have a lot more profit to make. The key to taking a good trade on peak 3 is by looking for bearish reversal candlesticks. These are your signals to go short.
- If you take a trade at peak 3, your profit target can be the neckline.
- Or if you take a trade on the breakout of the neckline, measure the distance in pips between the neckline and the highest of the 3 peaks and use that distance to calculate your profit target. Or you can use a previous low and use that as your take profit target level as well.
There you have it, that is the triple top and bottom patterns and how you can trade them. Notice in all these diagrams you do not need any indicator. You only need a price chart and one or two trendlines. Makes it quite simple , doesn’t it?
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