Triple bottom patterns are a bullish pattern. It consists of three valleys or support levels. After the first valley is formed, price goes up either quickly or gradually. After that, price moves back down to the first valley level and it holds that first support level, thus creating a double bottom. After that, price moves up then pulls back down to the first and second support level and holds, thus creating triple bottom. Look for price to hold support areas and continue up to confirm bullish continuation. Watch our video on how to identify and trade triple bottom patterns.
What Is a Triple Bottom Pattern & How to Identify These Patterns?
A triple bottom pattern consists of several candlesticks that form three valleys or support levels that are either equal or near equal height. Typically when the 3rd valley forms, it can’t holds support above the first two valleys and causes a triple bottom breakout.
These patterns are bullish reversal patterns found in bearish trends. Reversal traders like to buy low and sell high. They try to spot the best entries using price action, volume and patterns. Indicators are only secondary to their overall plan and only used for confirmation. Technical traders are always looking for patterns for their entry and exits. The triple bottom patterns has 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 (take our free courses and you’ll learn how to read the stock market).
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. Emotions and their influence in candlesticks remains true.
Basics of Triple Bottom Patterns in Stocks
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 with plenty of price structure. What I mean by that is an over-arching pattern will form. Such patterns as a wedge, triangle or rounding bottom. These are just a few patterns you need to be aware of. For a complete list take our candlesticks patterns course.
Bears have been in control of the trend but the bulls are starting to come back in, at a key support level for the time frame YOU ARE TRADING.
As we’ve stated multiple times, if you’ve been paying attention to our videos, patterns may not always form in perfect conditions, or turn at sharp right angles. They won’t look like works of art you see on websites.
You may see a triple bottom while in an uptrend before continuing higher. Another thing to keep in mind, is patterns break down. Are you in an extremely overbought market?
What does the RSI calculation say on that daily chart? Keep these things in mind so you are sure what type of environment you are trading in before pushing that buy or sell button on a stock triple bottom pattern.
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.
As long as you know doji candlesticks are indecision candles, spending time on whether it’s formed high wave candlesticks or hanging man candlesticks isn’t as important as knowing what the wicks are trying to tell you.
We teach how to trade candlesticks on our live daily streams. Check out our trading service to learn more about how we are teaching the 99% the strategies the 1% have been keeping to themselves.
Technicals of Triple Bottom Patterns
In order for a triple bottom pattern to form, it needs three lows. The first bottom could just be simple price action 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. Looking to learn stock market trading? Take our free stock training courses to help you get started.
Triple Bottom Stocks, Crypto, Forex or Futures
Triple bottom patterns can resemble other patterns as it’s developing. You can find them on any type of chart with a candlestick.
Hence the importance of being able to see patterns within patterns. Zoom out and look at the daily, hourly, and other time frames before you enter that trade on the 5 minute chart for day trading.
What are the other patterns that are on the chart? This is going to help you have the most success. I look for multiple patterns to SUPPORT my trade.
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, actually this is quite common to find.
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.
How to Trade Triple Bottom Stocks
- How to trade triple bottom patterns:
- Watch for the fall of 1st valley
- Next, watch for price to move up either quickly or slowly, building a support
- Then, watch for price action to fall again to the newly formed support area
- Next, watch for price to move up either quickly or slowly again..We are starting to see a strong signal form!
- Watch for price to fall again to previous two support levels..getting closer
- Traders take a long once price breaks above the neckline of top three valleys. Some traders will buy at the bottom of this support area, getting an even better entry.
- Place order either near the bottom support or as the price breaks out of the pattern after the triple bottom has formed.
- Set your stops and have your profit targets.
Resistance Turned Support
For 3 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 can take a month or two to form. Trading the breakout can profitable whether trading options for a living or using swing trading techniques. Remember, there are always patterns within patterns. Trading should be disciplined, and focused. Do not deviate from your trading plan.
Getting a confluence of indicators supporting your trade are going to help give you a higher probability of success.
One final tip: I for one will look for a moving average to help support a “triple bottom reversal” and an increase in volume to have a stronger signal.
Always be willing to study and practice before using real money. The more you learn, the better of a trader you will be. Take our free online trading courses.