Triple tops and triple bottoms are reversal patterns where price tests the same level three times before reversing. They are essentially double tops and bottoms with an additional test, making them rarer but potentially more significant. The three-touch structure confirms that a price level is acting as a strong barrier, and the eventual break of the pattern's support or resistance level triggers the reversal.
Three peaks (triple top) or troughs (triple bottom) at approximately the same level. Confirmation level is the lowest reaction low (top) or highest reaction high (bottom). Volume often decreases on each successive touch of the level. The third touch frequently shows momentum divergence on oscillators. More powerful than double tops/bottoms due to the additional rejection.
Enter on a confirmed break below the pattern's support (triple top) or above resistance (triple bottom) with volume expansion. Wait for a retest of the broken confirmation level for optimal risk-reward entry. Momentum divergence on RSI or MACD at the third touch adds strong confluence. The spacing between touches should be proportional — very tight clusters may not qualify.
Measured-move target equals the height of the pattern (from the peaks/troughs to the confirmation level) projected from the breakout. Place stops above the triple top or below the triple bottom. Take partial profits at 1:1 risk-reward and trail the remainder. Invalidation occurs if price reverses through the confirmation level after breakout.
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Triple tops and bottoms are often confused with rectangles — the key difference is the reversal context and the declining momentum on successive touches. Look for subtle lower highs on a triple top or higher lows on a triple bottom for the strongest formations. These patterns are most effective when they form after prolonged trends.
The head and shoulders is one of the most reliable reversal patterns in technical analysis. It consists of three peaks — a higher central peak (the head) flanked by two lower peaks (the shoulders) — connected by a neckline drawn across the reaction lows. A break below the neckline confirms the reversal, with the measured target equal to the distance from the head to the neckline projected downward from the breakout point.
Pennants are short-term continuation patterns that form after a strong directional move. They resemble small symmetrical triangles, with converging trendlines creating a compact consolidation zone. Unlike flags, which have parallel channels, pennants converge to a point. The breakout typically occurs in the same direction as the preceding move, with the measured target based on the flagpole.
Rising and falling wedges are converging trendline patterns where both support and resistance slope in the same direction. A rising wedge (both lines slope upward, converging) is typically bearish, while a falling wedge (both lines slope downward, converging) is typically bullish. Wedges differ from triangles because both trendlines slope in the same direction rather than converging symmetrically.
Bull and bear flags are continuation patterns consisting of a sharp price move (the flagpole) followed by a brief, counter-trend consolidation channel (the flag). Bull flags slope downward after an upward pole; bear flags slope upward after a downward pole. These patterns represent a pause in strong momentum before the trend resumes, and they are among the most commonly traded continuation setups.