How to trade triple bottoms

The triple bottom works like the double bottom. The only difference is that it tests the support three times and breaks the resistance line on the complete of the third peak at the bottom.

It is a strong bullish reversal pattern that normally forms after a long down trend. Its formation signals a probable bullish reversal in trend.

It forms three bottoms arranged almost at the same level. The highs and lows can be joined with a line to mark support and resistance levels. The pattern is considered complete when price breaks the highs or resistance line. As the price breaks the resistance line , we expect a change in the previous trend.

The resistance level commonly referred to as the neckline acts as the trigger line for the confirmation and entry-level in the direction of the reversal breakout. It is drawn by joining the highs of the first  and second bottoms of the pattern.

When a bullish candle breaks and closes above the resistance line, the pattern has confirmed a Buy signal

After entry, your stop-loss level should be set just below the 3rd bottom of the pattern. The profit target level is got by measuring the height of the pattern (distance from resistance line to the bottom) and then projecting that same distance forward from the resistance line to the upside as shown on the chart below.

Let’s take a look at the AUDJPY, Daily chart below;

On this above example, Buy signal was at break & close above the neckline. The Stop loss just below the 3rd bottom. The target was got by simply measuring the height of the pattern (H) and projecting that same distance from the neckline upwards.

Let’s take a look at another example on the CADJPY, Daily chart below

On the CADJPY, Daily chart above, Buy signal too was at break & close above the neckline. The Stop loss just below the 3rd bottom . The target was got by simply measuring the height of the pattern (H) and projecting that same distance from the neckline upwards

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