What does a Triple Top mean?
A Triple Top, also known as the triple top is a bearish pattern with an MN shape. Three bottoms come in succession, reflecting an important resistance. This marks a reversal testament. Below the triple top shows the resistance area that will lead to a correction of the price three times. The neckline pattern will be formed by the lower of these two bearish peaks. An initial correction will then occur and then the price will move back onto resistance. The size of these three peaks is normally identical (as in the case below), but it may happen that the first peak may be lower than the next two peaks. This composition strengthens the validity of the pattern as it reflects a breathlessness of buyers. If the second peak is higher than the other two, it may be a head and shoulders pattern. A further correction will be made, theoretically at the same level as the first correction. Assuming the neckline is broken at this point, it could be a double peak. In many cases, we know afterwards what kind of pattern we will face. A return on the resistance must be made. If the third top was higher than the first two, it would reinforce the chances of reversals (buyers’ breathlessness). The third correction that will cause the neckline to break out and will validate the bearish reversal. Once this neckline is broken, it may happen that the price will take resistance on it (that line becomes a resistance, called a pullback), then the price will take up its bearish movement. A target price will be determined by the gap between the resistance and the neckline. Another example of a triple top with breathlessness of buyers (the top is smaller and less high) is provided. The following are several statistics about the triple top: – In 85 % of cases there is a downward exit. – In 50 % of the cases, the target of the pattern is reached when the neckline is broken. – In 84% of cases, a pullback will occur. – In 85% of the cases, there is a pursuit of the movement when the neck is broken. In the event of a pullback, the downward movement may not be as important once the target of the pattern has been reached. If the resistance is tested too much before a correction (flat top), then the decrease after the neckline is broken will be more important. The more the three peaks are close, the more the success rate of the pattern is high. The more the movements between the neckline and the resistance are straight, the more effective the pattern will be. The more the bullish movement progresses the formation of the triple top is large, the more the downward movement at the breakout of the neckline becomes strong. The pattern is more effective if the third peak is not as high as the other two.
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