Triple Bottom Pattern

The "Triple Bottom" pattern is a reversal pattern that occurs at major market bottoms. The "Triple bottom" pattern is formed when prices fail to make new lows on three different occasions. Most "Triple bottom" pattern lows occur within 2% to 5% of price range. "Triple bottoms" are relatively easy to detect and offer good risk to reward ratio. A confirmation is needed before trades are initiated. Heavy volume is traded in the first swing down but the rest of the swings will have a diminished volume followed by heavy volume at breakouts.

The "Triple bottom" patterns offer excellent risk and reward ratios. There are two types of possible trades. The first trade is an aggressive type to buy near the higher of the first and second swing lows and protect the trade with the "lowest low." The second type of trade is triggered after a confirmation of the pattern. This confirmation of pattern occurs when the higher of two prior swings is traded. Enter a "long" trade above the high of the breakout bar.

Target:

In both trading cases above, targets are set from 62% to 100% of the depth of the three swings. Stop:

Protect the trades by placing a "stop" order below the "lowest low" of all three swing lows.

Trade

Triple Bottom

The Triple Bottom

Trading Triple Bottom Pattern

The example above shows a "Triple bottom" pattern from the Russell 2000 daily chart.

1. Enter first "long" trade above the high of a reversal bar after three "swing lows" at 685. Enter another "long" trade on the breakout of the "swing high" of the "Triple bottom" pattern (at 749).

2. Protect the trade by placing a "stop" below the "lowest" of three "swing lows."

3. The targets are set from 62% to 100% of the depth of "Triple bottom" pattern above the breakout level.

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