Triple bottom patterns are bullish reversal patterns found in bearish trends. Triple bottoms have three equal bottoms followed by a breakout above resistance.
This pattern is made up of a group of candlesticks. Each candlestick by itself tells a story but when grouped together, they paint a bigger picture.
As a matter of fact, patterns form through the tug of war between buyers and sellers. This push and pull between the two has been happening for a long time.
We get our Japanese candlesticks patterns from a rice trader who saw the connection back in 17th century Japan. All these years later and nothing has changed.
TRIPLE BOTTOM PATTERNS
In order for triple bottom patterns to form, a strong trend needs to be in place. The triple bottom typically forms in a long bearish downturn.
Bears have been in control of the market but the bulls are starting to come back in. Hence the tug of war that’s never ending.
As we’ve stated multiple times, if you’ve been paying attention to our videos, patterns may not always form in perfect conditions. You may see a triple bottom while in an uptrend before continuing higher. Or it breaks down.
In the stock market anything can happen. This is why we stress the importance of studying and not getting caught up in the exact shape of a pattern or candlestick formation.
TRIPLE BOTTOM PATTERNS – THE LOWS AND WHAT THEY MEAN
In order for a triple bottom pattern to form, it needs three lows. The first bottom could just be simple price movement. The first low forms and there’s not much thought about it.
The second bottom is signaling that the bulls are gaining momentum. A possible reversal is on it’s way.
Next, the last bottom forms. This indicated a strong support level is in place. When the bears see that they’ve hit a low 3 times and haven’t been able to push price lower, they give into the bulls as price breaks resistance.
The lows should be equal in price each time although that may not always be the case. If it’s not equal it needs to be pretty close to it. It also needs to be well spaced as well as have significant turning points.
TRIPLE BOTTOM PATTERNS – PATTERNS WITHIN THE PATTERNS
Triple bottom patterns can resemble other patterns as it’s developing. Hence the importance of being able to see patterns within patterns.
As it’s forming, you can see a double bottom pattern before the third bottom forms. It can also be inside a descending triangle pattern.
The support line forms horizontally while the resistance level forms the angle. Being able to draw support and resistance lines as well as trend lines are incredibly important. Read our post on how to draw support and resistance to learn more.
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TRIPLE BOTTOM PATTERNS – RESISTANCE TURNED SUPPORT
For triple bottom patterns to be complete, there needs to be a breakout of resistance. You can see in the charts posted above that once the resistance level was broken the stock moved up.
Support and resistance levels are something all traders pay close attention to. Once the resistance level is broken, it now becomes support.
The stock may head back down to test support and make sure it holds. You’ll notice in the charts above that the new support level was obeyed even weeks or months down the lines.
TRIPLE BOTTOM PATTERNS – HOW TO TRADE THE TRIPLE BOTTOM PATTERN
Always be willing to study and practice before using real money. The more you learn, the better of a trader you will be.
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