What Is a Triple Top Pattern? A triple top is formed by three peaks moving into the same area, with pullbacks in between. Let's take a closer look.
What Is a Triple Top?
The triple top is a kind of chart pattern that's utilized in technical analysis to predict when the price of an asset will turn around. A triple top, which consists of three peaks, indicates that the asset might no longer be rallying and that lower prices might be coming.
Triple tops can appear in all time frames, but they must follow an upswing in order to be recognized as such. A triple bottom, which indicates that the asset's price is no longer decreasing and may rise, is the opposite of a triple top.
How Does a Triple Top Work?
When the price of an asset forms three peaks at about the same price level, this pattern is known as a triple top. The area of the peaks is resistance. The swing lows refer to the declines that occur between peaks. If the price declines Below the swing lows after the third peak, the pattern is deemed complete, and traders look for a further decline.
The triple top resembles the head and shoulders pattern visually since it has three continuous peaks, although in this instance the middle peak is roughly equal to the other peaks rather than higher. When the price touches the resistance area twice, establishing a pair of peaks high Before falling, the pattern is comparable to the double top pattern. Trading triple tops is very similar to trading head and shoulders patterns.
Consider a stock's price peaks at $119, pulls back to $110, rallies to $119.25, pulls back to $111, rallies to $118, then drops below $111, which is a triple top and signals the stock is likely heading lower. chart below.
What Is a Triple Top Pattern? How Does It Work? - Hopefully, this article can help you to get some knowledge.
