Friday, April 19, 2024

Triple Top

A Triple Top is a chart pattern consisting of three equal highs followed by a break below support.

The

chart pattern is classified as a Bearish Reversal Pattern.

All three highs should be fairly equal, well spaced, and mark clear turning points to establish resistance.

The highs don’t all have to be at the exact same level, but they should be “close enough”.

That said, when the last high fails to reach the intermediate high, the trend may be exhausted and a stronger decline can be expected.

Triple Top

The

triple top pattern is similar in appearance to the head and shoulders pattern in that it is represented by a series of three highs and lows .

The difference is that all three highs of a triple top are at the same height, whereas in a head and shoulders pattern the second high is higher than the first and third highs.

The emergence of the

triple top indicates that has an uptrend and is currently in the process of reversing into a downtrend.

Buying pressure is declining, so the uptrend is losing steam.

As with triple bottoms, it is generally accepted that the longer a particular trend takes to fully develop, the stronger the significant price movement will be once a breakdown occurs.

The

Triple Top and Bottom is considered one of the slowest fully fledged chart pattern types.

When a triple top is forming, it can look like other chart patterns.

For example, before the third high pattern, the pattern may look like a double top.

Three equal high points can also be found in an ascending triangle or rectangle.

For a triple top, support can be identified by drawing a line through the base level of the low, which forms the “neckline“.

Once

the price level breaks below this support level , you have the option to open a short position.

Previous trend strength is also important. A triple top following a sharp uptrend can lead to a larger decline.

The

triple top should also be considered a neutral chart pattern until a breakout (breakout to the downside) occurs.

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