Triple bottom patterns are bullish patterns. It consists of three valleys or support levels. After the first valley is formed, the price rises quickly or gradually. Then, the price returns to the first valley level, holding that first support level and thus creating a double bottom. After that, the price moves up, then pulls back down to the first and second support levels and holds, thus creating a triple bottom. Look for the price to hold support areas and continue up to confirm a bullish continuation.
What Is a Triple Bottom Pattern?
Triple bottom patterns consist of several candlesticks that form three valleys or support levels, which are either equal or nearly equal in height. Typically, when the third valley forms, it cannot hold support above the first two valleys, causing a triple bottom breakout.
A strong trend must be in place for triple bottom patterns to form. The triple bottom typically forms in a long bearish downtrend with a well-defined price structure; watch for an overarching pattern to emerge.
Bears have been in control of the trend, but the bulls are starting to come back at a key support level for the time frame. May see a triple bottom while in an uptrend before continuing higher.
Triple Bottom Pattern Basics
For a triple bottom pattern to form, it needs three lows. The first bottom could be a simple price action movement. The first low forms, and there is little thought given to it. A second bottom is signaling that the bulls are gaining momentum. A possible reversal is on its way.
Next, the last bottom form. This indicates a strong support level is in place. When the bears see that the price has hit a low three times and cannot be lowered, they give in to the bulls as the price breaks through resistance. For a possible quick bounce off of support before looking to break down further later in the pattern.
The lows should be equal in price each time, although this may not always be the case. If it is not equal, it needs to be close to it. It also needs to be well-spaced and have significant turning points.
This is an example of a triple bottom pattern. Traders would enter a long position on the bullish candlestick that breaks resistance. They would stop below the third support level or the bearish candlestick in the picture. This picture shows a double bottom, as the middle bottom didn’t touch the other two. However, both patterns signal a bullish trend. Pattern formations aren’t always perfect, but they can signal the same thing.
Triple Bottom Pattern Trading Strategy
- Watch for the fall of the 1st valley.
- Next, watch the price move up quickly or slowly, building support.
- Then, watch for price action to fall again to the newly formed support area.
- Next, watch for the price to move up either quickly or slowly again.
- Watch for the price to fall again to the previous two support levels.
- Traders take a long position once the price breaks above the neckline of the top three valleys.
- Some traders will buy at the bottom of this support area, getting an even better entry.
- Place the order either near the bottom support or as the price breaks out after the pattern has formed.
- Set stops and profit targets.
Triple Bottom Pattern Examples
This is an example of a triple bottom on a daily chart of $META. It also appears to be a falling wedge pattern. The most recent pattern was a double bottom breakout. The hammer signaled that the breakout was about to happen because support held.
After the bullish reversal, the trend turned into a rising wedge pattern. Near the top of the trend, the two spinning top candlesticks signaled a bearish reversal.
AAPL Example
This is an example of a triple bottom pattern on a weekly chart of $AAPL. Note how there are three almost coequal bottoms, which form a strong support level. You’ll notice how triple bottoms look like inverse head and shoulders patterns. They tell a similar story: the trend will reverse and go bullish.
In this photo, a large descending triangle preceded the triple bottom breakout. Angular resistance from the descending triangle went to the base. Once the price broke out on the triple bottom, it formed a rising wedge pattern.
Demand Zone
This is an example of a chart of $TBF falling into a demand zone. It made three bottoms before reversing away from its downtrend. This pattern formed inside a large falling wedge pattern. The triple bottom breakout happened once the price broke out of the apex area of the falling wedge.
Similar Patterns
The picture above is a daily chart of $TSLA. It’s essential to remember that patterns can resemble one another and convey a similar narrative. In this picture, note the three circles. This appeared to be an inverse head and shoulders, a bullish pattern that tells the same story as a triple bottom pattern.
The bottoms aren’t co-equal, unlike they typically are with triple bottoms, but this is why it’s essential not to get hung up on the exact formation of patterns. You’ll want to pay attention to the pattern overall, not the exact name.
Additionally, patterns often fail, which is why it’s also important to look for smaller patterns within the larger overall pattern. Even though this looked like a bullish pattern, a bearish engulfing pattern formed right near the third support level. Once that bearish reversal pattern took place, you’ll notice that a bearish candlestick failed to hold the support level.
Suppose you look closely at the triple bottom pattern formed inside of a head and shoulders pattern, which is a bearish pattern. This is why it’s essential to obtain confirmation on the current price action: our minds can perceive what we want to see when trading, and this is where traders can get caught up in losing trades.
Final Thoughts on Triple Bottom Patterns
For the three bottom patterns to be complete, there must be a breakout of the resistance level. The chart above shows that the stock increased once the resistance level was broken. Once the resistance level is broken, it now becomes support.
A stock may head back down to test support and ensure it holds. The chart above shows that the new support level was obeyed even weeks or months later. As always, wait for confirmation and pair information from the charts to the trader’s game plan. Use proper risk management techniques when trading a triple bottom pattern.
Frequently Asked Questions
The triple bottom pattern has a success rate of 87% when the market is bullish. However, the success rate can change during bear markets.
A double bottom pattern is a more common pattern, but it remains an extremely reliable reversal indicator. They require three equal bottoms to form, whereas double bottoms only require two.
The triple bottom pattern shows the psychology where demand levels exceed supply levels. This typically leads to a reversal in price trend.
