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| Triple Top and Triple Bottom Patterns |
The Triple Top and Triple Bottom patterns,
which are rarely seen in the Forex market, occur as a result of the behavior of
buyers and sellers in the market. Usually, triple tops are formed at the top of
an uptrend, and triple bottoms are formed at the bottom of a downtrend. Both
patterns signal the end of the trend and the start of a new reversal.
Triple Top Formation:
Triple Top Pattern on Microsoft Corp. stock
The Triple Top pattern is a technical
analysis pattern that indicates the end of an uptrend in price action and the
beginning of a downtrend. This pattern is generally considered a trend reversal
and is taken into account by traders. A triple top pattern is defined as a
chart pattern in which three peaks occur at similar levels. The first top occurs
at the end of the trend, while the second and third tops occur at similar
levels. This situation is interpreted as a resistance level dominated by
sellers and where buyers prevent the price from going higher. Once the pattern
is complete, the price usually goes into a downtrend and pulls back towards the
previous support level. Traders wait for the support level to break to confirm
the completion of the triple top pattern and the start of the downtrend.
Triple Bottom Formation:
Triple Bottom on USD/NZD chart
The Triple Bottom pattern is a technical
analysis pattern that indicates the end of a downtrend in price action and the
beginning of an uptrend. This pattern also represents a trend reversal, similar
to the triple top pattern. In a triple bottom pattern, the price chart follows
a pattern where three bottoms occur at similar levels. The first bottom is
formed at the end of the trend, while the second and third bottoms occur at
similar levels. This is interpreted as a support level dominated by buyers and
where sellers prevent the price from falling further. Once the pattern is
complete, the price usually enters an uptrend and moves upwards, breaking the
previous resistance level. Traders wait for the resistance level to break to
confirm the completion of the triple bottom formation and the start of the
uptrend.