Triple Top-Triple Bottom

1. Triple Top

Triple top pattern is quite rare but easy to recognize. As you might have already guessed, this pattern comprises of 3 tops and 2 troughs in between. 3 tops can be in 5% range of each other for the pattern to be valid because trading is a science of probability not exactitude. The neckline of this pattern is drawn by connecting 2 troughs. When a price breaks through this neckline, we have an opportunity to sell. It is important as in Double top that we MUST WAIT until the pattern completes, which is the breakout of neckline. Historically testing has shown a significant percentage of failure when acting before pattern’s completion. And as usual, a pullback is common.tripple top

Trade this pattern:
+ Entry: Sell at the breakout point or wait for the pullback. However we recommend to at least commit some of your capital into selling the breakout as the pullback doesn’t happen all the time.
+ Stoploss level should be put right above the highest top.
+ Profit target should be 80%-100% the height of the pattern measuring from the neckline to the highest top. (Price should fall at least the height of the pattern measuring from the breakout point).

Examples:
AUDNZDDaily-triple top
In an ideal world, the neckline would be horizontal however we are living in a dynamic world. The neckline will not be horizontal as it is in the textbook. The purple vertical line measures the profit target of the pattern.

 

2. Triple Bottom

Triple bottom formation comprises of 3 bottoms and 2 peaks. 3 bottoms can be in 5% range of each other for the pattern to be valid because trading is a science of probability not exactitude. The neckline of this pattern is drawn by connecting 2 peaks. A throwback is common in this pattern.

tripplebottom

Trade this pattern:
+ Entry: Buy at the breakout or wait for the throwback. However we recommend to at least commit some of your capital into buying the breakout as the throwback doesn’t happen all the time.
+ Stoploss level should be put right below the lowest bottom.
+ Profit target should be 80%-100% the height of the pattern measuring from the lowest bottom to the neckline. (Price should rally at least the height of the pattern measuring from the breakout point)

Example:

Source: Stockchart.com
Source: Stockchart.com

Reminder: We need to WAIT until the pattern completes. Any rush into executing the trade will only result in a loss over the long term.

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