Triple bottom pattern

A triple bottom pattern shows sellers failing three times at one price area. Each decline reaches about the same low, buyers answer, and price rises again. After the third failure sellers are less willing to press, and when resistance over the pattern breaks, the traders who sold inside the range have to buy back.

The pattern is not complete at the third low. Until price closes above resistance it is only a range, and a range in a downtrend often breaks downward.

• A downtrend comes first. A reversal pattern needs a trend to reverse.
• Three lows at about the same price. They do not have to match exactly, but none of them should sit clearly below the others.
• Two rallies between the lows that end at about the same level. A line through these highs is the resistance of the pattern, also called the neckline.
• Space between the lows. Three lows within a few candles are one bottom, not three.
• Volume often dries up toward the third low and rises on the break of resistance.
• A candle that closes above resistance completes the pattern. Mark the two levels with horizontal lines or the rectangle tool to see the close clearly.

• Entry – on a close above resistance. A more conservative entry waits for price to return to the broken resistance from above and turn up again.
• Stop – below the third low. A tighter stop goes below the last swing low inside the pattern, at the cost of being hit more often.
• Target – measure the height from support to resistance and add it to the resistance level. Lows at 50 and resistance at 61 give a height of 11 and a measured target of 72. It is an estimate, not a level price has to reach.
• Position size – set it from the distance between the entry and the stop. See risk-reward ratio.

A double bottom has two lows and one rally between them. A triple bottom has three lows and two rallies. Many triple bottoms start as a double bottom that did not break its resistance: price slipped back, tested support one more time and only then turned up.

Both are read the same way and traded the same way. The triple bottom takes longer to form and is less common.

In an inverse head and shoulders the middle low is clearly deeper than the two on its sides. In a triple bottom all three lows are at about the same level. Both patterns are completed by a break of the line over the highs, and both use the height of the pattern as the target.

• Triple bottom – forms after a downtrend, three lows on support, completed by a close above resistance, read as bullish.
• Triple top – forms after an uptrend, three peaks under resistance, completed by a close below support, read as bearish.
• The measuring rule is the same: the height of the pattern projected from the broken level.

• Buying at the third low before resistance breaks – the range can still resolve downward. Some traders do buy there with a tight stop, but that is a trade on support, not on the pattern.
• Counting every small dip as a low – the three bottoms need clear rallies between them.
• Looking for the pattern without a downtrend before it – three equal lows inside a sideways market mean little.
• Ignoring the higher timeframe – a triple bottom that forms right under strong resistance has little room to rise.
• Entering late – after a long breakout candle the stop is far away and the trade no longer pays for its risk.