How To Trade Triple Bottoms

Triple Bottom is a rare variation of a Double Bottom. It's main difference is that instead of two consecutive bottoms, the Triple Bottom has 3 Bottoms on the Support level. Of course, this is also a reversal chart pattern which leads to the reversal of trend from Bearish to Bullish.

In many Triple Bottoms , the third Bottom does not reach the Support level like the first two - and is stopped before the Support level. This indicates that buyers are gaining strength, and sellers did not succeed in pushing the price towards the Support level.

Illustration

Volume
Volume should be decreasing - to show seller weakness. Volume one third bottom should be smaller then its two previous bottoms. The lighter volume indicate that buyers are taking control of the market and sellers are weakening. Another volume confirmation is a lighter volume on downswings and higher volume on upswings.

How To Trade
Trading is the same as the Double Bottom. Aggressive traders will attempt to catch the bottom itself and enter early. This can be done by drawing the Support line once it is tested by price, and waiting for a 3rd test from price. After a 3rd test is about to happen, wait for candlestick formation to signal the exact entry price.

More conservative traders will enter at the pullback to the neckline. This is done by waiting for neckline to be broken by price, and for price to pullback to the neckline. Once again, we wait for Japanese Candlesticks to confirm our entry. Description of several candlestick patterns are available in the Article section.

For thorough instructions on how the Double Bottom is traded, click here.

Win Percentage
78% of Success compared to 82% of Double Bottom.

Pullback Percentage
Pullbacks occur in 75% of Triple Bottoms - we will take the pullback and not trade the breakout itself.

Examples

Fig. 1: Triple Bottom in USD\CHF. Note how the Range Oscillator identified the exact entry point and signaled early reversal

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