Forex Trend Reversal: Triple Top and Triple Bottom Patterns

It is worth remembering that the major trend reversal patterns are:

• The head-and-shoulders and the inverted head-and-shoulders
• The double top and the double bottom
• The triple top and the triple bottom

This article considers the last pair - the triple top and the triple bottom formations.

Triple Top Trend Reversal Pattern

The triple top chart pattern represents a combination of the head-and-shoulders and the double-top trend reversal formations. As a result, the same characteristics as well as possible drawbacks and signals are possessed by the triple top as observed in the double top and head-and-shoulders.

The triple top formation consists of three tops that have almost the same altitude and depicts the following currency price movement:

1. The first step is the creation of a new peak in the uptrend movement of the price which faces resistance and causes the price to fall to a level of support.
2. Another rise of the price to the level of resistance follows, and then another fall to the support level.
3. The price rises for a third time only to fall again, this time through the level of support.

The three peaks are connected by a line (the support line) and a line parallel to it (the resistance line) is drawn.

Just as with the other major trend reversal patterns large market volume should accompany the price movement when it breaks below the support level.

Triple Bottom Trend Reversal Pattern

A combination of the inverted head-and-shoulders and the double bottom reversal formations gives the triple bottom, which is a mirror image of the triple top pattern. Again, this means that the same characteristics, potential drawbacks, signals, as well as trader's point of view can be referred to the triple bottom chart pattern.

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