Triple Top and Bottom Reversal Patterns

As we have covered the head and shoulders in such depth, the triple top and bottom pattern does not need to have such detail. As you might suspect from the name, this pattern is very similar to the head and shoulders, but the head is at a similar level to the other two peaks rather than standing out above or below (for the inverted variation) them. It’s only a minor variation, and the analysis is essentially the same. It is a much rarer pattern than the head and shoulders, as you can imagine, because the head can be any height above the shoulders, but a triple requires it to be at essentially the same level.

Once again, it is important to look at the volume to get some confirmation of the pattern. After all, a sideways trend would have peaks at the same level for an indefinite time with no reason to anticipate a reversal. What distinguishes the triple top or bottom is that the original trend shows signs of weakening, with reducing volume on each successive peak. You should see signs of stronger volume as the price retraces and when it breaks through the support level, or neck level. To confirm the pattern you need to see that break through, with prices closing on the other side. The price should not then go back through, otherwise the reversal may be failing, but it may return to the line before continuing the reversal.

The minimum price targets are calculated in the same way, too. However high the central peak is from the neckline, you can expect the price to go as far on the other side of the neckline or support. Again, pay attention to previously established support or resistance lines to get the whole picture.

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