Some chart-pattern formations are easy to mistake for one another, and this can often produce disastrous consequences. For example, a triple top could be mistaken for a double top, leading you to get in at the wrong time. Even worse, you could think a stock is in a double- or triple-top formation when it’s actually in a triple BOTTOM — and this could cause you to lose a lot of money.
A triple bottom is a bullish reversal pattern with three roughly equal lows. But in addition to the three bottoms, which form a sort of support line; a triple bottom will also have a RESISTANCE line established by the high points of the pattern. This can lead traders to easily mistake a triple bottom for a triple top — and vice versa.
How can you be sure to tell the difference? Watch this video!
In this episode, you’ll learn:
- The basic criteria of a triple bottom and how they differ from a triple top’s criteria (0:37)
- The more advanced criteria that make for better, more accurately profitable triple bottoms, and how to trade them (1:46)
- The importance of setting an appropriate price target (3:22)
We also take an in-depth look at a real-life example of a triple bottom and ask you to identify where the appropriate points are located on the chart. Then the points are illustrated for clarity, and finally, we show you what the stock did after coming out of the triple bottom formation.
The triple bottom seems easy enough when looking at it in an academic setting. But the reality of it is that triple bottoms are hard to spot, and difficult to differentiate from triple tops, double bottoms, and double tops. You need to know what you’re looking for, and this video will teach you.
Happy Trading!
Manny Backus
CEO, Wealthpire Inc.
P.S. Next week I’ll show you how to trade another “bottom” chart formation — the exotic-sounding Island Bottom. See you next week!
Episode 43 – Triple Bottom – A Bullish Reversal Pattern
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