Triple top and triple bottom are reversal chart patterns used in technical analysis to identify potential trend reversal points in financial markets, such as stocks, currencies, or commodities. These patterns are characterized by three peaks or troughs, and they can signal a change in the prevailing market trend.
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Triple Top:
Formation: A triple top pattern occurs after an uptrend. It consists of three peaks, with each peak reaching approximately the same price level. These peaks are separated by minor retracements.
Confirmation: To confirm a triple top, traders look for a breakdown below the support level, which is typically drawn at the troughs (the minor retracements) between the peaks. This breakdown suggests that the buying pressure has weakened, and a reversal might be underway.
Target: The price target for a triple top pattern is often estimated by measuring the distance from the top of the peaks to the support level and projecting it downward from the breakout point. This gives an approximate target for the subsequent downtrend.
Triple Bottom:
Formation: A triple bottom pattern occurs after a downtrend. It consists of three troughs, with each trough bottoming out at approximately the same price level. These troughs are separated by minor rallies.
Confirmation: To confirm a triple bottom, traders look for a breakout above the resistance level, which is typically drawn at the peaks (the minor rallies) between the troughs. This breakout suggests that selling pressure has weakened, and a reversal to the upside might be underway.
Target: The price target for a triple bottom pattern is often estimated by measuring the distance from the bottoms to the resistance level and projecting it upward from the breakout point. This gives an approximate target for the subsequent uptrend.
