A triple top pattern is a bearish pattern in technical analysis that signals a price reversal from a bullish trend to a bearish trend. Triple top pattern formation completion occurs when a market price downside breakout occurs below the support area. Finally, the “triple bottom” flips the triple top on its head – reflecting three swing lows at comparable support levels. Except this time, it signals seller exhaustion and hints at a potential upside breakout. This makes triple tops and bottoms chart pattern useful as mirror images to inform trades on both sides of price action.
How to Trade a Triple Top Pattern
The first triple top pattern trading step is to identify the triple top in a market. Scan for triple tops using a pattern scanner or browse the price charts manually for the pattern formation. We have a basic stock trading course, swing trading course, 2 day trading courses, 2 options courses, 2 candlesticks courses, and broker courses to help you get started. Put simply, the triple top stock pattern indicates a potential shift from an uptrend to a downtrend, signaling that bullish momentum may be ending. It is considered a bearish pattern, meaning prices are expected to fall after the triple top forms.
Each day our team does live streaming where we focus on real-time group mentoring, coaching, and stock training. We teach day trading stocks, options or futures, as well as swing trading. Our live streams are a great way to learn in a real-world environment, without the pressure and noise of trying to do it all yourself or listening to “Talking Heads” on social media or tv. Triple Tops can be found on every time frame from intraday to months. It will often take a few months to form and is a great reversal pattern for swing trading.
How to Trade Shooting Star Pattern
Be aware that past triple top pattern performance is not indicative of future trade results. Yes, a triple top pattern is reliable is reliable if the trading rules are strictly followed. Triple tops are more reliable on higher timeframe market charts and less reliable on lower timeframe market charts. The triple top middle swing high price peak component is the second resistance peak of this pattern and is located in the middle of the pattern. It forms when the price attempts to break the first high price resistance but fails. The triple top left swing high price peak component is triple top chart pattern the first resistance peak of this pattern and is located on the left side of the pattern.
What Is The Risk Management When Trading Triple Tops?
The currency price breaks down and falls below the support level and declines in a downward trend to the trade exit level. A volume surge during the breakdown adds weight to the validity of the pattern, suggesting that there is strong selling interest supporting the bearish price reversal and that big traders have started selling. A triple top pattern consists of several candlesticks that form three peaks or resistance levels that are either equal or near equal height. Typically, when the third peak forms, it cannot break above the first two peaks and causes a triple-top failure. A triple top pattern trading strategy is the 10EMA triple top trailing stop strategy.
Set A Price Target Order
After triple tops, these sellers tend to gain control which then causes the price to drop lower signaling a market shift from demand exceeding supply to now having too much supply compared to buying interest. We put all of the tools available to traders to the test and give you first-hand experience in stock trading you won’t find elsewhere. Also, we provide you with free options courses that teach you how to implement our trades as well.
- Now let’s shift from stylized letters and dive into real-world examples of these triple reversals in action…
- Each peak does not need to hit the same precise level but should spike to roughly match the previous high’s elevation.
- The third triple top pattern trading step is to place a profit target order by calculating the height distance between the pattern high and low and subtract this to get the take profit level.
- A triple top pattern’s alternative names are a “three top pattern” or a “triple top reversal” pattern.
- The difference is that the triple top does not have the bearish volume, so the bulls can come in once more to try and break the highs.
A triple top pattern is a reversal pattern signaling price reversals and is not a continuation pattern. The Bullish Bears team focuses on keeping things as simple as possible in our online trading courses and chat rooms. We provide our members with courses of all different trading levels and topics. What we really care about is helping you, and seeing you succeed as a trader. We want the everyday person to get the kind of training in the stock market we would have wanted when we started out.
Quad Top, Triple Top, and Triple Bottom Chart Patterns
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Triple Top Forex Market Example
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- The market asset pulls back and breaks down below the support level, rallies back to retest the trendline and then trends lower over the new few weeks to the trade exit point.
- A triple top pattern stock market example is illustrated on the daily Block Inc. (SQ) chart of above.
- You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
This repeated failure to breach the resistance point signals a shift in sentiment with sellers gaining confidence, anticipating a market reversal. A triple top pattern price target is set by taking the height between the swing high price and the support level and subtracting this calculation from the support level to determine a price target. Secondly in the triple top formation process is the price consolidation period. This price consolidation phase is caused by the price beginning to consolidate for a period of time within a price range indicating that the market is nearing a market top.
It forms when the market price reaches buyer exhaustion and the price struggles to move higher and instead retraces. We will help to challenge your ideas, skills, and perceptions of the stock market. Every day people join our community and we welcome them with open arms. We are much more than just a place to learn how to trade stocks. We also offer real-time stock alerts for those that want to follow our options trades.
How to Trade Head and Shoulders Pattern
A triple top is shaped with three swing high resistance points while a triple bottom is shaped with three swing low support points. A triple bottom looks like a triple top pattern turned upside-down. Triple top pattern psychology involves market participants experiencing diminishing optimism about an asset’s future price increase. Initially, the asset reaches a resistance zone, triggering profit-taking among some traders. After the first and second peaks, buyers struggle to push the price higher, leading to a third attempt and subsequent failure. Place a short trade when the price drops below the pattern support line.
As with all other reversal patterns, triple-top patterns are only competing once support is broken; the lowest point of the pattern is considered support. After the third high, the volume increases as the sellers/shorts come in and drive the price back down. Lower volume during the peaks indicates the bulls are losing momentum. Secondly, keep an eye out for three distinct peaks at roughly the same price level.