Triple top pattern

A triple top pattern shows buyers failing three times at one price area. Each rally reaches about the same high, sellers answer, and price falls back. After the third failure buyers are less willing to try again, and when support under the pattern breaks, the traders who bought inside the range are left with losing positions.

The pattern is not complete at the third peak. Until price closes below support it is only a range, and a range in an uptrend often breaks upward.

• An uptrend comes first. A reversal pattern needs a trend to reverse.
• Three peaks at about the same price. They do not have to match to the cent, but none of them should stand clearly above the others.
• Two pullbacks between the peaks that end at about the same level. A line through these lows is the support of the pattern, also called the neckline.
• Space between the peaks. Three highs within a few candles are one top, not three.
• Volume often gets lower from peak to peak and rises on the break of support.
• A candle that closes below support completes the pattern. Mark the two levels with horizontal lines or the rectangle tool to see the close clearly.

• Entry – on a close below support. A more conservative entry waits for price to return to the broken support from below and turn down again.
• Stop – above the third peak. A tighter stop goes above the last swing high inside the pattern, at the cost of being hit more often.
• Target – measure the height from resistance to support and subtract it from the support level. Peaks at 72 and support at 61 give a height of 11 and a measured target of 50. 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 top has two peaks and one pullback between them. A triple top has three peaks and two pullbacks. Many triple tops start as a double top that did not break its support: price bounced, tested resistance one more time and only then turned down.

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

In a head and shoulders the middle peak is clearly higher than the two on its sides. In a triple top all three peaks are at about the same level. Both patterns are completed by a break of the line under the lows, and both use the height of the pattern as the target.

Before support breaks, a triple top looks like a rectangle: price moves between flat resistance and flat support. The name depends on the exit. A close below support after an uptrend makes it a triple top. A close above resistance makes it a continuation of the uptrend, and the short idea is off.

• Selling at the third peak before support breaks – the range can still resolve upward.
• Counting every small wobble as a peak – the three tops need clear pullbacks between them.
• Looking for the pattern without an uptrend before it – three equal highs inside a sideways market mean little.
• Ignoring the higher timeframe – a triple top that forms right above strong support has little room to fall.
• Entering late – after a long breakdown candle the stop is far away and the trade no longer pays for its risk.