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Triple Bottom

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The triple bottom is a technical analysis pattern that signals the reversal of a long downtrend or the emergence from a trading range. Three troughs of roughly equal price level and a subsequent upside breakout above resistance characterize a triple bottom. The triple bottom pattern can manifest over any time frame, from within the course of a single trading day to many years. During the formation of a triple bottom, overall trading volume tends to decline. The volume of buying begins to increase after the triple bottom makes its third low. A breakout above overhead resistance confirms the validity of the triple bottom pattern and suggests the price trend for a security will be up. Until a security breaks out, traders consider the triple bottom to be a neutral pattern. The highest of the triple bottom formation's intermittent highs is considered to be resistance. After resistance in a triple bottom pattern is broken it becomes support. The breakout price target from a triple bottom is determined by calculating the price differential between the trough and resistance, then adding that amount to resistance. That price differential is then added to resistance to determine the ultimate price target.



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