Triple Top Pattern

by · January 1, 2010

TRIPLE TOP PATTERN
a good time to sell

Characteristics:
1. Volume is usually low during the second rally up and lesser during the formation of the third top;
2. The peaks may not be spaced evenly (like the double top);
3. The valleys may not bottom at exactly the same level; and
4. The triple top is confirmed when the price decline from the third top falls below the bottom of the three peaks’ lowest valley.

Selling Strategy
There are a number of ways that may be used to take advantage of this formation. The first and second peaks are usually the perfect points to sell. Another good time to sell is when the prices are moving up again with low volume and after the Double Top is confirmed. Or one can opt to sell short with a stop above the highest peak of the Double Top instead. The next logical time to sell would be after a Triple top has formed and a fourth top is being formed at the lower level.

Notes:
1. It is rare to see four tops or bottoms at equal levels
2. In case prices continue to rally up to the level of the three previous tops, there is a big probability that they will rally up higher
3. If the prices go down to the same level a fourth time, they usually decline.