Triple Tops and Bottom

Another major reversal patten are triple tops and bottoms, these occur when a stock bounces back repeatedly from a particular price levels after the occurrence of a major trend. If we compare them with the head and shoulders pattern discussed by us earlier, it seem to be just a small variation of the same concept. Let's have a look at it:



As can be seen in above chart there are three conditions in a tripple bottom chart pattern:

1) First of all there is a down trend prior to the occurrence of this pattern
2) The stock bounces upwards from a particular point and then moves in a range for sometime forming three bottoms as can be seen in above chart.
3) Breakout is confirmed when the neckline is crossed by the stock

If we compare it with the inverted head and shoulders pattern the only difference we find is the head is at the same levels of the shoulders. Targets are determined by measuring the  depth of the bottoms from the neckline as can be seen from the following chart.



The target so determined are just first targets actual targets can be even higher. Let's have a look at tripple top.



As the above figure is saying itself, tripple top chart patterns are just opposite of  tripple bottoms and hence the conditions are:

1) First of all there is a up trend prior to the occurrence of this pattern
2) The stock bounces downwards from a particular point and then moves in a range for sometime forming three tops as can be seen in above chart.
3) Breakout is confirmed when the neckline support is broken by the stock

Targets are determined by measuring the depth of neckline support to the resistance.levels as can be seen from above chart.

Another variation of this pattern is double tops and bottoms following are its examples:


In case of both double top and triple tops there is singal of trend reversal rom up to down as soon as the neckline support is violated so its best to liquidate your long positions and go short as soon as this pattern is confirmed.



Like triple bottom, a double bottom pattern signals trend reversal as soon as the neckline is crossed and it would be a good idea to go long once this pattern is spotted. But, one important thing to consider here is to wait for clear cut breakout before reaching to any conclusions. In order to make sure breakout is clear-cut following additional criteria can be used:

1) The breakout above or below the neckline should be done on a closing basis, a intraday penetration is not enough to confirm the breakout
2) Two day penetration rule can be used to confirm breakout, which states that price should close above the breakout levels for two consecutive days.
3) Percentage criteria, which requires a close 3-4% above the breakout levels.

These criterias mentioned here are not infallible but yes these can help the odds to turn in your favour. In order to avoid false signals u can keep fakeout zones in your charts of say 4%, to keep our false signal:



Before ending it's not a bad idea to look at few more examples of double/tripple tops and bottoms:














So, you must be thinking the concept is fine, but how would I search for the occurrence of these patterns out of thousands of available stocks. So, here is the website that will help you to scan for this chart pattern:

link to topstockresearch website

You can here find stocks and apply all the concepts learnt by us so far support and resistance, head and shoulders, tripple/double tops & bottoms etc.

Happy Learning
The Stock King

Also Check:

Introduction to Chart Patterns
Head & Shoulders Reversal Pattern
Breakaway Gaps & Island Reversal


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7 comments

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Anonymous
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March 11, 2015 at 1:09 PM delete

Can you please suggest me a share(for long term) i want invest 50,000 As i'm new for trading also give some links where i can get overveiw of this.

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March 11, 2015 at 6:56 PM delete

u can go for kse...............a good bet for long term to see our analysis on it search kse from the search option located above. Undertake your own analysis before investing

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SauriN PateL
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March 12, 2015 at 5:24 PM delete

Pls advice can I enter in il&fs engg at cmp??

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anujcool
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March 12, 2015 at 10:26 PM delete

Hey Abhi,

Nice link....just like we have screener.in to check the fundamental of a company....this link is good for the technical side .... Is Datamatic Services good @73 levels?

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March 12, 2015 at 11:30 PM delete

datamatics is bullish u can go for it according to me................

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March 12, 2015 at 11:30 PM delete

avoid ilfs for now...............

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March 13, 2015 at 3:08 PM delete

Thank You for showing the graphs representation.

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