Forex Dance Patterns

Triple Top Triple Bottom – Reversal Patterns


Jul.18.2013

Triple top triple bottom are both reversal patterns, but they have exactly opposite interpretations. A triple top pattern reverses an uptrend, whereas a triple bottom pattern reverses a downtrend. Just like the doubles, in trading, a triple top and a triple bottom don’t happen at the same time. You can have either a triple top or a triple bottom pattern formation on a chart

Triple Top Triple Bottom - Reversal Patterns - Babies Metaphor Triple Top Triple Bottom - Reversal Patterns - Babies Metaphor

 

A Triple top is a reversal pattern made up of three similar highs; it and usually follows an up-trending market as seen in the figure below.

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A Ttriple Ttop is a reversal pattern made up of three similar highs; it and usually follows an up-trending market.

Confirming a Triple Top

There are three things you need to keep in mind in order to confirm a Triple Top pattern.

- The peaks follow an uptrend.

- The pattern is formed in a relatively short period of time.

- There is a break below the common support level (neckline) after the triple top.

 

Two Things happen after a Triple Top Formation

- A key support level is born: The lowest point of the triple top marks a key support.

- Support becomes resistance: After the rebellious pair breaks the key support level, the broken support becomes a potential new resistance level.

A Story of a Triple Top

Once upon a time, the price of the Aussie-Dollar pair was on an uptrend (see Figure below). It went up until it got to point A, and then wasn’t able to go any further. It seemed as if it had hit a resistance level. It then traded in a range for about an hour and completed 5 candlesticks before starting an upward movement to point B. Failing to pierce through resistance even at points B and C, with not enough demand from the traders and a decrease in volume, the tired pair’s price had no choice but to fall. It fell all the way to and through the support of the triple top pattern, which is also called the neckline. This was the end of a glamorous uptrend for the pair. The bears had won the battle, and the price was now in a downtrend.

Triple Top Pattern Formation on AUD/USD 15- minute Char Triple Top Pattern Formation on AUD/USD 15- minute Chart 

And what happened to the broken support level? Is it ever going to get back on its feet again after this? Well, there is still hope for this level. As they always say, what doesn’t kill you makes you stronger. The broken support level has now, in fact, turned into a powerful resistance level. Subsequent rallies in the future will test this new resistance level on their way up, and this level is now happy because it has been honored with the title “key level.”

Triple Top Triple Bottom - Homework

What, you thought I would be kind enough to tell you the stories of all Triple Top Triple Bottom patterns? That’s wishful thinking, for sure. It is now your turn to open up your demo trading platform, go through the different charts in different periods of time, and look for a triple bottom. It could be something in the past, or it could be something that’s just in the process of forming now. Then write the story of the triple bottom in your own words in your forex notebook and share it on the Invest Diva’s Forex Community later.

 

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Good to Know…

Double or triple patterns can sometimes extend to quadruple tops or bottoms or other complex formations, but the laws of confirmation are basically the same as those of doubles and triples.

 

Triple Top Triple Bottom - Just Like Babies' Butts and Heads! Triple Top Triple Bottom - Just Like Babies' Butts and Heads!

 

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