What is ‘Triple Bottom’ chart pattern?
Triple Bottom is a pattern used to predict the reversal of a prolonged downtrend. A triple bottom pattern shows 3 different small lows at approximately the same amount. The triple bottom is said to be a difference of the head and shoulders bottom, as there are three equal lows followed by a break, above resistance.
How does it work?
The triple bottom pattern consists of three acute lows at around the same price levels. The bounce off the resistance near the third peak is a clear indication that buying interest is exhausting. It is used by traders to predict the reversal of the uptrend. The pattern is completed when the price moves above the resistance level and begins trading in an upward trend.
How to Trade with Triple Bottom Chart pattern?
- The pattern typically takes almost 4 months to develop. It is one of the longer patterns to develop.
- The triple bottom is a reversal pattern. This means it is important to the quality of the structure that it starts with a downward trend in a stock’s price.
- All three lows should be reasonably equal.
- As the Triple Bottom Reversal develops, overall volume levels usually declines. After the third low, an expansion of volume and the resistance breakout greatly reinforces the indications of the pattern.
- The distance from the resistance breakout to lows can be measured and added to the resistance break for a price target.