How to trade using Triple Bottom Pattern?
Different parts of Triple Bottom pattern
There are four major parts which forms this pattern.
1. First Valley – V/U Shaped – The market does a pullback during a downtrend and forms an V/U shape. At this point, there’s no way to tell if the market will reverse because a pullback occurs regularly in a trending market.
2. Second Valley – V/U Shaped – The price gets rejected at the same area, again. At this point, the market makes a pullback and forms a consolidation. This is a first sign that the market could reverse higher. This forms the second V/U shape
3. Third Valley – V/U Shaped – Again, the market attempts to break out lower and fails, again. The price gets rejected at the same area once again. This forms the third V/U shape. Now the 3 “spikes” are visible after 3 failed attempts to break out.
4. The trendline – This is the last line of defence for the sellers. If the price breaks above it, the market could reverse, head higher and begin the start of a new uptrend.
Once you identify the Triple Bottom formation, just draw a straight line at the top which connects swing high of the valley. We will get a technical breakout when the price gives breakout above the line drawn.