Triple Bottom Pattern

Triple Bottom Pattern

 

Let’s analyse now the Triple Bottom Pattern, another Pattern of the technical analysis. The Triple Bottom is a Reversal Pattern. Let’s analyze it point by point. Remember, that in order to understand better the Pattern of the technical analysis, you should know how the Trend Lines and Resistances/Supports work (For this reason we suggest you to read: What is a Trend and what are Trend LinesResistance and Supports).

Features of the Triple Bottom Pattern

 

 

Triple Bottom Pattern

– Pattern composed by: three Lows that reach the same level.

– Located in a Downtrend; the longer the trend is, the more reliable the Pattern is (if it lasts for months it’s better).

– The three Lows: must be at the same level, more or less (It’s possible a slight deviation of not more than 3% of the price of the Previous Low).

– The volumes of trades: they should be decreasing during the formation of the Pattern; sometimes the volumes rise close to Three Lows of the Pattern. After the third Low, when there is the rise (3) and when there is the break of the Resistance, there is an increase in volumes.

– Break of the Resistance: once that the prices break above (Go from below to above) the Resistance, the Pattern is completed (There should be an increase in volumes). The Broken Resistance, now becomes a Support (that can sometimes be tested by prices, before continuing the rise).

– Minimum Price Target: you have to measure the distance between the resistance and one of the three Lows, and then project it from the break of the Resistance (Resistance that you plot from the Highest High that there is during the formation of the Pattern ).

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