Triple Top Pattern: How to Trade With Examples

This approach involves patience, allowing the price to confirm the new resistance level after the initial breakout. A triple top is a bearish reversal pattern characterized by three peaks occurring after a bullish trend. A perfect triple top has three peaks at the same level, suggesting that the market lacked the strength to break through the previous highs. The triple top pattern is an effective bearish reversal chart pattern that may signal the end of an uptrend and the beginning of a downtrend. You want to see an increase in volume when the price breaks below the support level.

Triple Top vs Head and Shoulders

This means for every 100 trades, a trader wins 41 trades making 2 units (82 units total) and loses 59 trades losing 1 unit (59 units total). Therefore, over 100 trades, a trader should hypothetically net 23 units (82 units – 59 units). Be aware that past triple top pattern performance is not indicative of future trade results. Triple top pattern’s win rate is 41% from our backtesting data of analyzing 1,710 of these chart pattern formations.

Ignoring Volume Confirmation

1.When a pullback occurs, it gives you a logical level to set your stop loss. For example, your stop loss can go above the highs of the pullback (instead of the highs of the Triple Top pattern). One must keep the following pointers in mind for effective triple top pattern trading. IU offers 3 trading courses with a track record of transforming brand-new traders into full-time trading professionals.

In contrast, the triple bottom pattern forms three troughs at the same support level as buyers emerge and propel the bounces off the lows. Specifically, traders will look to initiate a short trade once the asset price breaches support after the third peak. This breakdown signals sellers have overwhelmed buyers, and the uptrend is reversing. The stop loss should then be placed just above the high of the third peak, which also marks the resistance zone the asset failed to overcome three times. The breakout occurs when the price moves below the consolidation range, drawn as a line connecting the two lows of the pattern. This breakout signals a bearish reversal according to the traditional interpretation.

Triple Top Chart Pattern with Examples

As the name implies, the defining characteristic of a triple top is the three attempts by prices to rise above a certain resistance level. Each peak is usually slightly lower than the last as buyer enthusiasm diminishes. If, after the third effort, prices are unable to punch through resistance and instead break below a supportive floor, it confirms the pattern and indicates an uptrend may be nearing its end.

What’s The Difference Between a Triple Top vs Head and Shoulders Pattern?

When sellers prevail after three failed peaks, the triple top signals the uptrend may be over. In conclusion, the Triple Top Pattern is a powerful tool in technical analysis that helps identify potential trend reversals in financial markets. By understanding its definition, working mechanism, spotting techniques, and trading strategies, traders can gain an edge in their decision-making process. However, combining the Triple Top Pattern with other technical indicators and performing a thorough analysis before making trading decisions is essential. Always manage risk effectively and adapt your approach based on market conditions.

1. Alternatively, you may place your stop loss a few pips above the resistance level.
2. It features three peaks in a row at roughly an identical price level and consists of a couple of minor pullbacks between them.
3. The Triple Top Pattern holds significance for traders and investors as it provides valuable insights into market dynamics.
4. The opposite of a triple is a triple bottom, which indicates the asset’s price is no longer falling and could head higher.
5. Jesse has worked in the finance industry for over 15 years, including a tenure as a trader and product manager responsible for a flagship suite of multi-billion-dollar funds.

Conversely, a triple bottom is a bullish reversal chart pattern, indicating a change from a downtrend to an uptrend. This pattern occurs when the price hits a support level three times and fails to break below it, demonstrating that selling pressure is weakening and buying pressure is gaining strength. The triple top chart pattern is a powerful chart formation that consists of three consecutive highs at nearly the same level within an uptrend.

It signals a potential trend reversal, indicating that buyers are losing control to sellers. When price finally does break out of the price pattern, it can represent a significant change in sentiment. Figure 1 shows a pennant price pattern that formed on the weekly chart of Alphabet Inc. (GOOG). Once price continued in its established direction, the upward move was substantial.

Some traders will enter into a short position, or exit long positions, once the price of the asset falls below pattern support. The support level of the pattern is the most recent swing low following the second peak, or alternatively, a trader could connect the swing lows between the peaks with a trendline. When the price falls below the trendline the pattern is considered complete and a further decline in price is expected. As the price falls, triple top chart pattern it puts pressure on all those traders who bought during the pattern to start selling.