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Triple Top Pattern

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Triple Top Pattern

What is a Triple Top Pattern?

A triple top pattern is a bearish reversal chart pattern that signals a potential shift from an uptrend to a downtrend. It forms when the price reaches the same resistance level three times but fails to break above it, indicating weakening buying pressure and an eventual price decline.

Traders use the triple top pattern to identify selling opportunities and confirm trend reversals.

How the Triple Top Pattern Forms

  1. First Peak: Price rises to a resistance level, then pulls back.
  2. Second Peak: Price retests the same resistance level but fails again.
  3. Third Peak: A final attempt to break resistance, followed by a sharp decline.
  4. Neckline Break: The pattern is confirmed when the price breaks below the support level (neckline).

Example of a Triple Top Pattern

  • A stock rises from £100 to £120, then falls to £110.
  • It rises again to £120, then falls to £110.
  • A third rise to £120 fails, leading to a break below £110, confirming the pattern.

Key Characteristics of a Triple Top Pattern

Three Equal Peaks – Price tests the same resistance level three times.
Neckline Support – A horizontal support level connects the lows between the peaks.
Breakout Confirmation – A strong volume increase as the price breaks the neckline confirms the pattern.

How to Trade the Triple Top Pattern

1. Identify the Pattern

  • Look for three peaks at resistance and a support neckline.
  • The pattern is more reliable if it forms over a longer time frame.

2. Wait for Neckline Breakout

  • A break below support confirms the bearish signal.
  • Higher trading volume strengthens the breakout.

3. Enter a Short Position

  • Place a sell order after the neckline breaks.
  • Conservative traders wait for a retest of the neckline before entering.

4. Set Stop-Loss & Take-Profit

  • Stop-loss: Above the last peak to protect against false breakouts.
  • Take-profit target: Measure the distance between the peaks and the neckline, then project it downward.

Triple Top vs. Other Reversal Patterns

PatternDirectionPeaksConfirmation
Triple TopBearishThreeNeckline break downward
Double TopBearishTwoNeckline break downward
Head and ShouldersBearishThree (middle peak higher)Neckline break downward

FAQs

What is a triple top pattern?

A bearish reversal pattern where price fails to break resistance three times, leading to a downtrend.

How do you confirm a triple top pattern?

The pattern is confirmed when price breaks below the neckline support with high volume.

Is the triple top pattern reliable?

Yes, but it works best when combined with volume analysis, RSI, and MACD confirmation.

Where should I place my stop-loss?

Above the last peak to minimize risk in case of a false breakout.

What is the difference between a triple top and a double top?

A triple top has three resistance rejections, while a double top has only two.

Does a triple top always lead to a downtrend?

Not always. A failed pattern can lead to a bullish breakout, so confirmation is key.

Can I use a triple top in forex trading?

Yes, it works in forex, stocks, commodities, and crypto markets.

What timeframe is best for a triple top pattern?

It is most effective in 4-hour, daily, or weekly timeframes for strong confirmation.

How do I calculate the target price after a triple top?

Measure the height of the pattern (peak to neckline) and project it downward.

Can I trade a triple top without waiting for confirmation?

No, waiting for neckline confirmation reduces the risk of false breakouts.

Disclaimer: The content on this site is for informational and educational purposes only and does not constitute financial, investment, or legal advice. We disclaim all financial liability for reliance on this content. By using this site, you agree to these terms; if not, do not use it. Sach Capital Limited, trading as Traders MBA, is registered in England and Wales (No. 08869885). Trading CFDs is high-risk; 74%-89% of retail accounts lose money.