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Triple top and triple bottom

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Triple top and triple bottom

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. The bounce off the resistance near the third peak is a clear indication that buying interest is becoming exhausted, which leads many traders to predict that a long-term reversal is about to occur.

The three consecutive tops make this pattern visually similar to the head and shoulders pattern, but in this case, the middle peak is nearly equal to the other peaks rather than being higher. The pattern is also very similar to the double top pattern, whereby the security only rises to re-test its prior highs one time before breaking down. The key difference between the double top and triple top is that the double top pattern doesn’t have enough bearish volume following the second peak, which leaves room for bulls to make another attempt to break out to new highs.

Here’s an example of a triple top pattern:

triple top and triple bottom
triple top and triple bottom

 

BREAKING DOWN ‘Triple Top’

The three consecutive tops make this pattern visually similar to the head and shoulders pattern, but in this case, the middle peak is nearly equal to the other peaks rather than being higher. The pattern is also very similar to the double top pattern, whereby the security only rises to re-test its prior highs one time before breaking down. The key difference between the double top and triple top is that the double top pattern doesn’t have enough bearish volume following the second peak, which leaves room for bulls to make another attempt to break out to new highs.

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