The triple bottom reversal pattern has three roughly equal lows and indicates an opportunity to take a bullish position. Before the triple bottom occurs, the bears are usually in control of the market, forming a prolonged downtrend. The first bottom does not indicate anything out of the ordinary. Still, the second and third bottoms show a change in direction where buyers (bulls) may push the price action higher after the price breaks through the resistance.
As with other reversal patterns, there should be an existing trend – a current downward trend in this case. Similar to the triple top pattern, the three bottoms should be nearly equal in size and have sufficient space between them. There should be a clear indication of a drop in volume leading into the pattern and an increase in volume on the advance and at the resistance break. Finally, the price should break through the resistance level, which is at the highest point of the highs present between the bottoms. The price may test the new support level it has found. The price target is calculated as the value from the resistance break to the base points plus the resistance break.
A limitation of the triple bottom is that it does offer a reasonable risk and reward equation. Traders should consider a triple bottom as a neutral pattern until they can confirm a breakout. Like the triple top reversal pattern, a triple bottom takes typically three to six months to form.
Taking Advantage of the Triple Bottom Pattern
once the stock chart has two bottoms, it will result in an uptrend until the stock reaches the upper support level again. Here, the pressure will be induced again on traders to sell the security, and as a result, the price will return to the previous low where it’ll hit resistance resulting in the third bottom. Heading into the third downtrend, buyers and sellers converge, but the lower price increases demand, and the buyers pushed the stock higher, forming the final uptrend. Traders watch closely as the price moves higher, but the triple bottom pattern can’t be confirmed until the price action trades over the upper support level.
Once it does, the price target can be measured by subtracting the distance between the lows and the upper support level added to the breakout point. For example, if the low is $20 in the upper support level is $25, you can expect the price action to continue for $5 above the breakout point, so a trader would want to sell once the stock price reached $30.
Breakout confirmation: The confirmation for this pattern is a close above the upper trendline with above-average volume.
Measuring: Take the distance between the first high and the low of the head and then add it to the upper resistance level on the breakout.
Volume: The volume tends to be low, heading into the formation and increase on the breakout.
Conclusion
The triple bottom pattern is a reliable tool for technical traders, allowing them to find the reversal within the trendline, but also calculate how far that trend will go once it’s established. Traders should treat the triple bottom pattern as a neutral pattern until the breakout is confirmed. Once the upper resistance level is broken with a sharp increase in volume, the momentum will likely carry the price action higher.
To learn more aboutstock chart patternsand how to take advantage oftechnical analysisto the fullest, be sure to check out our entire library of predictable chart patterns. These include comprehensive descriptions and images so that you can recognize important chart patterns scenarios and become a better trader.
Chris Douthit, MBA, CSPO, is a former professional trader for Goldman Sachs and the founder of OptionStrategiesInsider.com. His work, market predictions, and options strategies approach has been featured on NASDAQ, Seeking Alpha, Marketplace, and Hackernoon.
The triple bottom reversal pattern has three roughly equal lows and indicates an opportunity to take a bullish position. Before the triple bottom occurs, the bears are usually in control of the market, forming a prolonged downtrend. The first bottom does not indicate anything out of the ordinary.
The Triple Bottom Reversal is a bullish reversal pattern typically found on bar charts, line charts and candlestick charts. There are three equal lows followed by a break above resistance. As major reversal patterns, these patterns usually form over a 3- to 6-month period.
The triple bottom trading pattern is a measure of the amount of control buyers have over the market price in relation to the sellers. The pattern appears on a price chart as three equal low levels followed by an uptrend that breaks through the resistance level after the third dip.
A Triple Bottom is a bullish reversal chart pattern that forms after a downtrend. It signifies a potential trend reversal and a shift from a bearish sentiment to a bullish one. The pattern consists of three consecutive bottoms or lows at or near the same level, creating a distinct support area.
A triple-bottom stock chart pattern has an 87% success rate on a reversal of an existing downtrend. When the price breaks through resistance, it has an average 45% price increase. The triple bottom occurs when the security price hits the bottom three times, creating a “VVV”-shaped pattern.
The price first breaks out of the channel and below the trendline, signaling a possible trend change. The price then also makes a lower low, dropping below the prior low within the channel. This further confirms the reversal to the downside. The price then continues lower, making lower lows and lower highs.
The bottom reversal pattern indicates a potential change in trend from a downward trend to an upward trend. This pattern occurs when a stock or other financial instrument reaches a new low but subsequently rallies and closes above its previous low thereby creating a pattern of higher lows.
A triple bottom is a visual pattern that shows the buyers (bulls) taking control of the price action from the sellers (bears). A triple bottom is generally seen as three roughly equal lows bouncing off support followed by the price action breaching resistance.
The three-line strike candlestick chart pattern is a pattern with specific criteria that do not occur often. This pattern is a continuation pattern that is a pause that refreshes higher and helps identify a consolidation in a trend. This differs from a reversal pattern that generally points to changes in a trend.
The three inside down pattern is a bearish reversal pattern composed of a large up candle, a smaller down candle contained within the prior candle, and then another down candle that closes below the close of the second candle.
The price target is calculated as the value from the resistance break to the base points plus the resistance break. A limitation of the triple bottom is that it does offer a reasonable risk and reward equation. Traders should consider a triple bottom as a neutral pattern until they can confirm a breakout.
The triple bottom chart pattern is a rare, but extremely effective reversal pattern. It's rare since the successive creation of three equal lows doesn't happen quite often. Therefore, the double bottom is a more frequent chart pattern as it requires one low less to happen..
Triple Top Pattern is a popular chart pattern used in technical analysis to identify potential trend reversals in financial markets. This pattern is typical in stock trading, forex markets, and other trading instruments.
The triple bottom trading pattern is a measure of the amount of control buyers have over the market price in relation to the sellers. The pattern appears on a price chart as three equal low levels followed by an uptrend that breaks through the resistance level after the third dip.
Triple bottom line theory expands conventional business success metrics to include an organization's contributions to social well-being, environmental health, and a just economy. These bottom line categories are often referred to as the three “P's”: people, planet, and prosperity.
The three drives pattern consists of a series of higher highs or higher lows. It is similar to the ABCD pattern. The difference is that a Three drives pattern is made of 5 legs, while an ABCD pattern has only 4. Three-Drives is a reversal pattern, so it signals an upcoming change in a trend.
The classical approach to pattern 1-2-3 involves opening short positions at the break of the correctional low. The buyers who seriously expect the upward trend to be restored are most likely to have set their stop orders there. Their avalanche triggering allows you to see a sharp downward movement in the chart.
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