Triple Tops and Bottoms

Triple tops and bottoms are very much like a double top and bottom formation. When you see a triple top or bottom, know that the next move could be a very large move to the upside or downside, depending on the bullishness or bearishness of the pattern.

Spotting a Triple Top Chart Pattern

A triple top is formed by three equal-sized peaks at the top of a chart. When the price makes three big tops, you can confirm your entry point with a break through the neckline, the trend line that is providing support to the triple top pattern.

Here is an example of a triple top:

Spotting a Triple Bottom

A triple bottom is much like an inverted triple top. The triple bottom bullish chart pattern is confirmed when the price moves through the resistance line, also known as the neckline. In moving through this line, the trader can ride the momentum up the chart.

Here is an example of a triple bottom:

Triples Happen when Doubles Fail

When the double tops and bottoms fail to break through the neckline, they often go on to form triple tops and bottoms. This is why traders are advised to play the trade only after a break through the neckline, as it is only at that point that the trade is confirmed and the chart pattern is likely to deliver on its massive move up or down.

Note a few things about triple tops and bottoms:

• More power than doubles – A triple top and bottom will break quickly, sometimes leaving a gap where the price of an exchange rate changes quickly after breaking through the neckline. Think back to the discussion on trend lines—trend lines offer stronger breakout moves when it has experienced multiple touches.
• Triple tops and bottoms don’t fake – Whereas a double top and bottom may go for another peak or dip to become a triple, a triple top or bottom is less likely to do so. It is a very directional indicator. When a triple is confirmed, it usually moves big.