Triple Bottom & Triple Top Patterns Explained

Triple Top and Triple Bottom Patterns

A triple top or triple bottom pattern is a chart feature which traders of an asset, such as Bitcoin (BTC), Ethereum (ETH) or other cryptoassets, can use to catch major trend changes.

A comparatively rare phenomenon, a triple top or triple bottom can prove to be trend-defining events, especially on longer timeframes.

What is the Triple Top Pattern?

A triple top pattern can form when an asset in an uptrend — or even a parabola — encounters resistance and slows its gains.

After reaching a certain price level, the asset meets resistance and begins to retrace, only to bounce back and challenge that resistance level two more times. This is what gives the triple top its name — an asset establishes resistance once, then gets rejected at that level twice more, leading to three rejections in total.

What happens afterward — in a confirmed triple top scenario — is a protracted downtrend and the invalidation of the previous uptrend or parabola.

Triple tops are thus formidable bear signals, and unlike double tops present themselves highly infrequently, leading traders to take more notice of them when they do occur.

Due to offering a specific level which acts as resistance three times, triple tops are also useful for assessing the asset’s broader price behavior, as a breakthrough later on would suggest a sea change in market sentiment.

Formation of the Triple Top Pattern

An example of how a triple top pattern might be formed is as follows:

An asset, crypto token A, forms what is first treated as a possible local high after a period of gains characterized as an uptrend. 

After a retracement, upside returns and crypto token A continues toward that local high, only to again encounter resistance. This suggests that this resistance point could become a double top level and figure as a more important ‘line in the sand’, or level to break through, in future.

Crypto token A then begins to fall once more, but unlike in a double top scenario, makes a third trip to the local resistance level, this time being definitively rejected. Its entire uptrend then reverses, beginning a new bearish trend lasting much longer than the triple top event.

How to Spot Triple Top Patterns

It is rare that an uptrend produces a specific resistance point which is tested a full three times before sparking a trend change.

Even in the often parabolic uptrends of cryptoassets, triple top patterns do not occur all the time. Their rarity is useful for traders, however, as once formed, a triple top can stand out against other chart formations.

Triple tops can occur on any chart timeframe, meaning that even trading five-minute or hourly charts can be profitable should such a formation begin to appear.

The main prerequisite for spotting a triple top is the existence of a major uptrend to begin with — if this is in doubt, the asset may not have broken out beyond previous significant levels and a triple top is thus unlikely to come next.

Later in the event, the presence of a resistance level sparking clear rejection several times is the calling card for a topping-out phase which could then invalidate the asset’s uptrend definitively. 

What is a Triple Bottom Pattern?

A triple bottom pattern is essentially the inverse of the triple top. Its formation and characteristics are the same, but the other way around.

As such, triple bottoms denote a downtrend ‘bottoming out’ or finding long-term support, which ultimately spurs a reversal and the start of a new uptrend.

Like the triple top, a triple bottom consists of three lows in succession, but this time with a relief bounce in between each. These lows form the support level at which bears are unable to drive the market down any further, and similarly mark where significant buyer interest resides.

Triple bottoms are also rare, but offer insights into where an asset might end a protracted period of losses and stage a longer-term comeback. 

Formation of the Triple Bottom Pattern 

With an understanding of how triple top patterns form, triple bottoms will appear straightforward.

Crypto token B, having resided within a clear downtrend, hits a support level which sparks a relief bounce to temporarily break its bearish trajectory. This bounce is unsuccessful in spurring a full recovery, however, and waning momentum causes crypto token B to fall back to its previous low. The process then repeats, with three visits to the lows in total sandwiching two relief bounces.

What happens next also corresponds to the completion of the triple top — in this case, crypto token B breaks out above the relief bounce level to begin grinding higher.

How to Spot Triple Bottom Patterns

On the whole, triple bottoms are just as conspicuous as triple tops thanks to their three repeated lows. On a candle chart, these are often easily visible as wicks marking the point at which selling pressure runs out.

Together with the relief bounces, a triple bottom formation resembles the letter W on the chart — in contrast to the triple top, which looks like an M.

An important thing to note concerns two related chart formations: the head and shoulders and inverse head and shoulders patterns. While similar in form to triple tops and triple bottoms respectively, head and shoulders patterns contain a clear swing high or low, rather than three near-identical swing highs or lows.

Both styles of pattern, however, can signal an incoming trend change.

How to Trade with the Triple Top and Triple Bottom Pattern

Thanks to their clearly-defined characteristics and tendency to denote major trend shifts in an asset’s price performance, trading with triple tops and triple bottoms can be highly profitable.

In order to confirm their formation, however, it is necessary to ensure that an asset really has exited one trend to begin another after putting in its corresponding three tops or bottoms.

To do this, traders can insert two vertical lines — one through the middle of the first top or bottom, and the other through the third top or bottom.

The result is a vertical channel between those two levels, and the lowest (for the triple top) or highest (for the triple bottom) point in between is the price to watch next. Once the asset breaks through that level, it should mark the completion of the formation.

The breakout confirmation level can be more easily monitored by drawing a horizontal line between the two vertical ones.

Examples of Triple Top & Triple Bottom Patterns

Example of Triple Top Pattern in Crypto

The chart below shows the 15-minute candle chart of the BTC/USDT pair on Binance during July 2023. Triple tops and bottoms can occur across multiple timeframes, and opportunities exist even over shorter periods.

In the chart, Bitcoin stages a snap shift higher to find resistance at $27,500. It then attempts to retest this level multiple times, with only two of these coming close to the initial local high.

Using the method described above, a horizontal line drawn through the first and third visits to the highs, together with a horizontal line to find the lowest retracement level in between, gives a ‘line in the sand’ at around $27,150.

Once BTC/USDT broke through this, it rapidly reversed course to erase its prior gains. Attempts to break back up through the area around $27,150 in subsequent days also failed, cementing it as resistance once lost.

Example of Triple Bottom Pattern in Crypto

The chart below shows the 1-day candle chart of the BTC/USDT pair on Binance in mid-2021. At the time, Bitcoin was in the midst of a retracement from its recent all-time highs of around $58,000 seen in April that year.

Bitcoin took several months to find a price at which buyer support resumed, and this required a drop of 50%.

Using the method described above, two vertical lines were placed through the first and third bottoms, both of which were between $29,000 and $30,000. A horizontal line was added, showing the breakout zone at approximately $42,500.

Once BTC/USDT passed through that price point, it went on — albeit not in a straight line — to hit a fresh all-time high in November 2021.

Conclusion

Triple top and triple bottom chart formations are rare, even in crypto, but offer highly lucrative potential trading opportunities. The conditions required for a confirmed triple top or triple bottom are well defined and often clearly visible, and are important for identifying significant trend changes taking place.

In the volatile world of crypto, even short-term trends can be strong enough to see triple tops and bottoms form, as speculative buyers and sellers fight for control.

If correctly identified, these chart patterns offer traders valuable insight into an asset’s trading behavior at specific price points. 

Triple tops and bottoms are not foolproof, however, and are best taken in conjunction with complementary data from metrics such as the relative strength index (RSI), which should show trading volumes supporting completion of the triple top or bottom.

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FAQ

What is a triple top in crypto?A triple top is a chart formation which shows an asset, for example a crypto token, encountering a rejection level three times. In between, retracements separate these tops, but every attempt to break higher results in rejection. This then becomes a longer-term resistance zone, often leading to protracted price downside in the meantime.

Is a triple top bullish?

A resistance level which endures multiple tests but keeps bulls from breaking higher does not provide a suitable long opportunity. Triple tops are rare, but their presence after an uptrend reinforces the idea that buyers are losing control of market trajectory.

How do you identify a triple top?

Triple top patterns are clearly visible thanks to their three peaks and intervening retracements. They form a W shape, and the subsequent downside they induce leaves them all the more conspicuous. For a triple top to form, an asset needs to be exhibiting an uptrend, which it then abandons. This can occur over short as well as long timeframes, however, and in crypto especially, trend conditions can change frequently.

What is the triple bottom pattern in BTC?

In Bitcoin, as with any other asset, a triple bottom consists of a similar swing low getting hit three times in between two relief bounces. These bounces initially fail, but the triple bottom zone remains as support, and is a key signal that buyers are willing to step in and exhaust sellers. Once complete, a successful triple bottom will spark a resurgence in buyer control, taking the market higher, beyond key levels identified during the triple bottom formation.

Is a triple bottom bullish?

Triple bottom patterns, when accompanied by supportive volume data, can be a sure sign that an asset is preparing to exit a downtrend. Even on shorter timeframes, triple bottoms can offer lucrative trading opportunities as levels of buyer interest emerge. It is worth nothing, however, that neither triple tops or triple bottoms are 100% reliable, and as such, the presence of what appears to be such a formation does not represent a guarantee of easy profit. Successful trades require consensus of multiple chart signals to confirm a certain trend event.

What is a double versus a triple top?

A double top is a shorter-lived version of the triple top — the asset price encounters a resistance level twice before beginning a more significant retracement or downtrend. The same is true for double bottoms against triple bottoms — here, the support zone is reached in two trips before a rebound begins.