The Triple Top Pattern 

The triple tops pattern is one of the most well-known and prevalent patterns across various financial markets. We will discuss this pattern in detail and explain how a thorough understanding of it can simplify your trading and make it smoother and more profitable.

So, what is this pattern?

Where does it appear, and on which time frame? 

And what is the psychology behind its formation? 

Definition of the Triple Top Pattern: - 

It is a reversal pattern that appears at the end of an uptrend to turn it into a downtrend and usually appears in resistance zones.

It consists of three relatively equal and largely symmetrical peaks, as shown.

Important conditions for the formation of the triple top pattern: –

1- It must be preceded by an uptrend.

2- The triple top pattern reverses the uptrend into a downtrend regardless of whether trading volumes are high or low, because prices in a downtrend can fall simply due to their own weight. 

3- The larger the pattern’s volume, the greater its potential targets.

4- The pattern forms on all time frames.

The psychology behind its formation:-

When the first peak forms, prices are still within the uptrend, and buyers remain strong here, as what has occurred is merely a correction within the uptrend.  

Then prices rise again to form the second peak, but buyers are surprised by very heavy selling at the same level as the first peak—contrary to expectations—so prices fall. Buyers then try once more to push prices higher, but sellers remain strong enough to push prices back down to the levels of the first and second peaks.

At this point, sellers become dominant, and a break below the neckline or support level of the triple top, followed by a close below it, confirms the start of the downtrend.

How to trade the triple top pattern: - 

When the pattern forms and a candle closes below the neckline, we enter a short position and place a stop-loss above the third peak. The target is the distance between the highest peak and the neckline; typically, the peaks are equal in height, so you can use any peak to determine the target. The distance is measured from the start of the neckline, and this is the first expected target.

It often yields many significant targets, as shown. Dear reader, intensive practice with this pattern will yield you substantial profits if you master it.