Bulkowski's Triple Tops

Pattern interpretations should be fairly specific, but not overly exacting as to obstruct the spirit of the pattern.

The third peak or the third reaction of off resistance is an indication of selling interest is outweighing buying interest and the trend is in the process of reversing We need to define a couple of rules about the triple top pattern: Either way, each peak should be on decreasing volume. 

There are three equal highs followed by a break below support. The next important thing we need to establish is where to place your protective stop loss.

Triple Tops: Summary 

10 Chart Patterns For Price Action Trading. The trading method is akin to the Double Top / Bottom chart pattern. For a Triple Bottom chart pattern, buy: On break-out above the resistance line; or; On pullback to the resistance .

The third peak or the third reaction of off resistance is an indication of selling interest is outweighing buying interest and the trend is in the process of reversing We need to define a couple of rules about the triple top pattern: In order to have a reversal we must have a prior trend in the background in order to reverse. The strength of the bullish trend might determine the strength of the sell-off.

At the same time, the sellers are starting to become a bit more aggressive as they are prepared to pay the higher price and we reach a point of equilibrium between the buying and selling power. The triple top pattern is a more powerful reversal pattern because by the third failed attempt to break above resistance more sellers see that buyers are weak and unable to push the price higher so they step in more aggressively and in the end manage to drive the price lower.

Triple Top Chart Pattern Trading Strategy Triple top patterns occur very rarely in the higher time frame which is the reason why we apply the Triple Top chart trading strategy mainly on the intraday charts.

But, what is a rounded top? But the idea is that we need a quick move up followed by a quick move down to define a rounded top.

Allow a pips variation between the three tops The second criterion of tradable triple top patterns is that you need to allow a pips variation between the three tops.

What do we mean by that? The probability of three tops happening at the same exact price level is almost impossible. What is more important is the closing price, which can align perfectly if the location of the triple top pattern is good. Entry 1 at the third resistance retest and Entry 2 at the support breakout If you want to take a little bit more risk and be more aggressive you can also enter at third resistance test in anticipation that the triple top reversal will hold.

What we prefer here to do is to split our risk in order to gain more and enter half of our position at the third retest and the second half at the support breakout. From a swing trading perspective, you want to see when the sentiment has changed from bullish to bearish and that indication can only be given by the support breakout of the triple top reversal. The next logical thing we need to establish for the Triple top chart pattern trading strategy is where to take profits.

See below… Step 4: Take Profit equals the same distance in price as measured from the highest peak to the lowest valley The minimum average decline after the triple top reversal breakout is approximately equal to the same distance in price as measured from the highest peak to the lowest valley.

In this same vein, the Triple Top Reversal should also be treated as a neutral pattern until a breakdown occurs. The inability to break above resistance is bearish, but the bears have not won the battle until support is broken.

Volume on the last decline off resistance can sometimes yield a clue. If there is a sharp increase in volume and momentum, then the chances of a support break increase. When looking for patterns, it is important to keep in mind that technical analysis is more art and less science. Pattern interpretations should be fairly specific, but not overly exacting as to obstruct the spirit of the pattern. A pattern may not fit the description to the letter, but that should not detract from its robustness.

For example, it can be difficult to find a Triple Top Reversal with three highs that are exactly equal. However, if the highs are within reasonable proximity and other aspects of the technical analysis picture jibe, it would embody the spirit of a Triple Top Reversal.

The spirit is three attempts at resistance, followed by a breakdown below support, with volume confirmation. ROK illustrates an example of a Triple Top Reversal that does not fit exactly, but captures the spirit of the pattern. The stock was in an uptrend and remained above the trend line extending up from Oct until the break in late August Over a period of about 4 months, the stock bounced off resistance around The first attempt happened in May, the second in July and the third in August. The decline from the third high broke trend line support and the stock continued to fall past support from the previous lows.

Triple Top Reversal support should be drawn from the lowest low of the pattern, which would be the May low around Volume expanded after the stock broke trend line support. The stock paused for a few days when support at After the support break, there was a test of the newfound resistance a few weeks later. Money flows continued to indicate selling pressure and volume expanded when the stock began to fall again.

 

Triple Tops: Important Bull Market Results 

Triple top patterns occur very rarely in the higher time frame which is the reason why we apply the Triple Top chart trading strategy mainly on the intraday charts. You can safely apply this strategy on the higher time frames but you’ll need a lot of patience as you’ll have fewer signals.

The Triple Top Reversal is a bearish reversal pattern typically found on bar charts, line charts and candlestick charts. There are three equal highs followed by a break below support. As major reversal patterns, these patterns usually form over a . The triple top pattern is a type of chart pattern used in technical analysis to predict the reversal of a long-term uptrend. The pattern occurs when the price of a security creates three peaks at nearly the same price level. 

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Price Target

A triple top pattern is a very reliable stock chart pattern used in stock market technical analysis charts. Learn more and see a chart example. The pattern is considered complete when the price drops below the retracement low on a double top or below both retracement lows on a triple top. The attached chart shows a triple top. Notice the three peaks and the two retracements lows.

Triple top is a technical analysis chart pattern that consists of three highs close in proximity. Triple Top Pattern is one of the Trend Reversal Patternswhich typically forms in an uptrend and signals a possible reversal of the rising trend into a downtrend.

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