Triple Top and Triple Bottom Mastery

Triple tops and bottoms are among the most reliable reversal patterns because price tests a level three times and fails, confirming strong supply or demand.

Triple Top Pattern


Formation

• Price rises to a resistance level three separate times
• Each peak reaches approximately the same price level
• Valleys between peaks form a "neckline" support
• Volume typically decreases on each successive peak

Psychology Behind It

• First peak: Normal profit-taking at resistance
• Second peak: Buyers try again but sellers defend
• Third peak: Buyers give up, sellers take control
• Neckline break: Remaining bulls exit, shorts pile in

Trading the Triple Top

1. Identify three roughly equal peaks at resistance
2. Draw the neckline across the two valleys
3. Wait for a close below the neckline
4. Enter short on the neckline break
5. Stop loss: Above the highest peak
6. Target: Distance from peaks to neckline, projected downward from the breakout

Confirmation

• Decreasing volume on each peak
• RSI bearish divergence across the three peaks
• Break below the neckline with increased volume

Triple Bottom Pattern

Formation

• Price falls to a support level three separate times
• Each trough reaches approximately the same level
• Peaks between troughs form a neckline resistance
• Volume typically increases on the third bounce

Psychology Behind It

• First bottom: Normal buying at support
• Second bottom: Sellers push again but buyers defend
• Third bottom: Sellers exhausted, buyers take control
• Neckline break: Bears cover shorts, longs pile in

Trading the Triple Bottom

1. Identify three roughly equal troughs at support
2. Draw the neckline across the two peaks between them
3. Wait for a close above the neckline
4. Enter long on the neckline break
5. Stop loss: Below the lowest trough
6. Target: Distance from troughs to neckline projected upward

Triple vs Double Patterns

Why Triple is Stronger

• Three tests confirm the level more definitively
• More time for accumulation/distribution to complete
• Higher probability of follow-through after breakout
• Usually produces larger measured moves

When Double Becomes Triple

• If a double top/bottom fails to break the neckline
• Price returns to test the level a third time
• Wait for the third test before re-entering

Common Mistakes

1. Entering before the neckline breaks
2. Peaks/troughs do not need to be exactly equal (allow 1-3% tolerance)
3. Ignoring volume patterns
4. Setting stops too tight (inside the pattern)
5. Not accounting for false breakouts - wait for a candle close

Combining with Other Tools

• Fibonacci: Check if the neckline aligns with a key Fibonacci level
• Moving averages: The 200 SMA near the neckline strengthens the signal
• RSI: Triple divergence across all three peaks/troughs is very powerful

Key Takeaways

1. Three tests of a level creates a very reliable reversal signal
2. Volume should decrease on each successive test
3. Always wait for the neckline break before entering
4. Measured move target = distance from extreme to neckline
5. Triple patterns take longer to form but have higher success rates