Triple Top and Triple Bottom: The Ultimate Reversal
The Logic of Repeated Failure: What is a Triple Top?
A Triple Top is a bearish reversal pattern that occurs when the price attempts to break above a clear horizontal resistance level three separate times and fails. Each time price hits the resistance, selling pressure increases, and the subsequent pullbacks get deeper. This represents the total exhaustion of the bullish trend.
While a Double Top is more common, the Triple Top is significantly more powerful because it shows that the bulls have failed to break the 'Ceiling' even after three major structural attempts. This failure often leads to a massive 'Liquidity flush' as buyers are forced to liquidate their positions.
Criteria: Volume Decay on the 3rd Peak
To identify a high-quality Triple Top, you must look at the Volume at each peak. 1. Peak 1: Highest volume as price first hits resistance. 2. Peak 2: Lower volume, suggesting interest is waning. 3. Peak 3: Lowest volume, indicating buyers have no more strength left to challenge the level.
This volume decay confirms that the bulls are 'Exhausted'. If you see a Triple Top with increasing volume on the third peak, be careful—it might be an 'Institutional Accumulation' phase leading to a massive breakout instead of a reversal.
Triple Reversal Checklist
Structure: Three peaks at nearly identical horizontal levels
Volume: Verify volume decay on the second and third peak
Neckline: Draw a horizontal support through the consolidation lows
Entry: Wait for a candle close below the neckline
Target: Measure vertical depth and project DOWN (or UP)
Stop-Loss: Place 10 pips beyond the highest peak
Strategy: Trading the Neckline Breakdown
The Signal Entry: The neckline of a Triple Top is the horizontal support level formed by the lowest swing points between the three peaks. A decisive candle close below this neckline is your primary signal to enter a short position. Confirmation: Always wait for a retest of the broken neckline. In a valid Triple Top, the initial breakout is so violent that it triggers a series of stop-losses, and the first return to the neckline is a high-probability 'Cell-off' opportunity.
Target Calculation: The Depth of the Pattern
The minimum profit target for a Triple Top is the vertical distance from the horizontal resistance (the peaks) to the horizontal support (the neckline).
Project this same distance downward from the breakout point. If the pattern is 100 pips deep, your target is 100 pips. This structural symmetry is based on the 'Measured Move' principle that a major reversal will mirror the height of its consolidation phase.