TechnicalAnalysis Charts Explained
TripleTop Pattern
A Triple Top pattern(TT) is abearish stock market technical analysis charts reversal pattern that isfoundat market tops.Stock chart patterns recognition
A Triple Topis one of the most reliable stockchartpatterns found intechnical analysischarts. Itis a straightforwardformation defined by three clear peaks in the market at about the sameprice levels. It is a variation of the Headand Shoulderspatternexcept that the three peaks all top around the same price level in asimilar way to the doubletop.The first peak in a tripletop chart pattern is created when the prices fall back ina consolidationfollowing a clear trendingphase in the market. Prices then rise againto a around the level of the first peak but buyers fail to gain enoughmomentum to push prices up through the resistance. The third peak iscreated in exactly the same way.
Prices can fallslightly short or slightly exceed the previous highs but as long asthey alltop at around the same price levels it is quite normal. Either way,each peakshould be on decreasing volume.
As prices fall back again sellers gain control and volume increases.The Triple Top is created when prices break down through the level ofthe previous consolidationlows and this should be broken on highvolume.
Backtest
A normal market will usually come back up to backtest the validity ofthe break down through the supportlevel. This should be on much lower volume buton rare occasions, it may not do abacktest if the market isveryweak.Volume Confirmation
- 2nd peak - decreasing volume
- 3rd peak - decreasing volume
- Subsequent decline - high volume
- Break - high volume
- Backtest - low volume
Targets
A valid triple toppattern produces a measured move so we canfind a price target by calculating the vertical height of theconsolidation zone, andthen measuring an equal distance below.Stops
A triple top patternfails and is not valid if prices break back abovethe highsbefore hitting its pricetarget. If prices are accepted back into thetopping zone once it has broken down through support, it severelyweakens the odds that it is a valid Triple Top chart pattern.
Triple TopChart Pattern
