The triple top chart pattern is one of the most potent and reliable Chart patterns used by technical traders. It can provide information about potential price reversals and help forecast upcoming price movements and identify entry and exit points for trades. In this article, we’ll explore the Tripple top pattern, how to trade with it, and how it can help increase your trading success.
What is a Triple Top?
The Tripple top pattern is a trend reversal chart pattern. That means that the triple top chart pattern indicates that the price of an asset may reverse from the current trend and enter a new trend.
A triple top consists of 3 peaks above a support/ neckline. The pattern works in every time frame. However, A triple top pattern works best on higher time frames, like hourly, Daily, and weekly.
How to Identify a Triple Top Pattern
Identifying a Triple Top Pattern is relatively straightforward and involves looking for a series of three peak points on the price chart of security. The three peaks should be at similar levels, and a support line should connect the bottom of the three peaks. Like every other Reversal pattern, A triple top is only confirmed when the asset price breaks below the support/neckline.
Significance of the Triple Top
Technically, The Triple Top suggests that the price of a security is struggling to break through the resistance level, and the trend is likely to reverse. This typically signals a bearish turning point in the security’s price and suggests that the price may be set to move lower.
However, it is essential to understand the psychology behind the pattern; During a triple top pattern, the price fails to break the resistance levels. This means buyers are not interested in buying the asset at this price range because If the price can’t rise above resistance, there is limited profit potential in holding onto it. Therefore, if the asset price breaks the key area of support, traders and investors holding long positions will be forced to exit their positions, and new short positions will be triggered. The increased volume of selling would result in the price falling down.
How to Trade Triple Top Patterns
To Trade with the Tripple Top pattern, you must first identify the market’s current trend. Since the triple top is a Bearish reversal pattern, the current trend of the market should be an uptrend. After Identifying a triple top pattern in an uptrend, Traders should look to take a short position if the price breaks and closes below the support/ neckline. Place your stop loss orders just above the third top of the pattern. The price target should be placed at an equal distance between the neckline and peaks.
The Triple Top Pattern is a valuable tool for traders to identify potential reversal points in the security price. A triple top is a reliable chart pattern. Still, it is essential to note that no chart pattern or Indicator is 100% correct, which is why it is recommended to use it in combination with other tools and Indicators in a comprehensive trading system.