TRIPLE TOP PATTERN. Tips on how to trade it 📚

🟢The triple top is a very powerful reversal pattern. Visually, it represents three consecutive peaks approximately equal in height. Formally, it can be considered as a special case of the head and shoulders formation, whose head height is approximately equal to the shoulders. Moreover, the differences between them are purely academic, since, from a practical point of view, both of them indicate a change in the uptrend to a downtrend.

✅The pattern reflects three consecutive unsuccessful attempts to break through a certain resistance level. At the same time, each subsequent unsuccessful attempt indicates a weakening of the bulls and increases the likelihood of a future reversal.

❗️To correctly identify the pattern, the analyst should pay attention to the following conditions.

1️⃣The formation of a triple top should be preceded by a solid upward (bullish) trend, which should last at least a month, and preferably several months.
2️⃣Three consecutive tops must be clearly expressed and be approximately the same height. Through their maxima, the upper resistance level is built. The maxima should differ from each other by no more than 1-2%.
3️⃣ The lower support level is built through the minimum of the retracement after the first and second peaks depending on which of them will be lower.
4️⃣ As the triple top forms, there should be a gradual decline in trade volumes. At the same time, a local increase in trading volumes in the area of a top formation is considered acceptable. This is a confirmation of the gradual weakening of bull pressure on the market and a sign of an approaching trend reversal.
5️⃣ The triple top gives its final confirmation only after breaking through the lower support level after the formation of the third top. The breakout should be accompanied by a significant increase in trading volumes, and the appearance of price gaps on the chart is also desirable. After breaking through, the support level becomes the resistance level, in the area in which subsequent corrective price movements are possible.
6️⃣ To determine the goal of the price movement, it is necessary to measure the distance between the lower support level and the maximum point of the triple top. Then this distance should be projected from a broken support level to the downside.
7️⃣ The reliability of the patterns directly depends on the duration of the period during which it was formed. It should be at least several months.

⚠️In technical analysis, the triple top is one of the most difficult to recognize and "insidious" figures for an investor. Until the third top is formed, this figure looks like a classic double top. Also, three consecutive peaks of approximately equal height are characteristic of the ascending triangle and rectangle patterns, which are trend continuation formations. Thus, the final confirmation of the triple top is received only after a consequent breakout of the lower support level, which should be accompanied by a sharp increase in trading volumes.

Do you trade triple top?🤔

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