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Triple Bottom Reversal Pattern

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Old 01-03-2016, 20:25
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Default Triple Bottom Reversal Pattern

What is The Triple Bottom Reversal Pattern?

The Triple Bottom Reversal pattern is a major bullish reversal pattern. It is quiet simple to recognize when you know what to look for. To simplify, let’s divide it into 3 main parts. It usually consists of three roughly equal troughs followed by a break above the key resistance. This reversal chart pattern takes 3 to 6 months to form. It is usually seen on bar charts, candlestick charts and line charts. However, the Triple Bottom Reversal pattern is completely different from a Triple Bottom Breakdown on a P&F chart.

Characteristics of the Triple Bottom Reversal Pattern.

Prior Trend: This Forex chart pattern should be preceded by a long and established downtrend.

Three Troughs. The three troughs should be roughly equal, and most importantly, reasonably spaced. They must have well marked turning points, which are joined to form the resistance line.

Volume. The volume should decline during the formation of the triple bottom reversal pattern. However, volumes spikes once the accelerated incline starts. It happens from the third trough and the trend line breaks above the key resistance.

Resistance Break. The Triple Bottom Reversal pattern is considered complete only when the trend line breaks above the resistance line. It is marked by the highest point of the intermittent highs.

Resistance Turned Support. The broken resistance turns into a new support. This support level is tested a couple of times during the correction rally.

Price Target. The consequent price target is calculated by adding the distance between the troughs and the resistance break point to the resistance break itself. Interestingly, the breakout is more significant if the forex pattern takes longer to form.

Key Notes. During the formation period, the Triple Bottom Reversal pattern may resemble other forex patterns. Chart patterns as the Double Bottom Reversal and the descending triangle or rectangle patterns. However, the Triple Bottom Reversal pattern has a bearish overtone. Furthermore, the pattern becomes complete only when the trend line breaks above the resistance line. Then, it turns into a support level. Volumes increases dramatically in this phase. It indicates that the breakout may occur shortly.

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