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. After that, the price moves back down to the first valley level, and it holds that first support level, 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.
Triple bottom patterns consist of several candlesticks that form three valleys or support levels that are either equal or near equal height. Typically, when the third valley forms, it cannot hold support above the first two valleys and causes 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 downturn with plenty of price structure; watch for an over-arching pattern to form.
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 not much thought about it. A second bottom is signaling that the bulls are gaining momentum. A possible reversal is on its way.
Next, the last bottom forms. This indicates a strong support level is in place. When the bears see that it hit a low three times and cannot lower the price, they give in to the bulls as the price breaks 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 that may only sometimes 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.
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Trading Triple Bottom Patterns
- Watch for the fall of 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 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
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Triple Bottom Example #2
This is an example of a triple bottom pattern on a weekly chart of $AAPL. Note how there are three almost coequal bottoms, which formed a strong support level. You’ll notice how triple bottoms look like inverse head and shoulder 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.
For three bottom patterns to be complete, there must be a breakout of resistance. 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 trade’s game plan.
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 more common pattern but it is still an extremely reliable reversal pattern. They require three coequal 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.