But what does a triple bottom pattern look like? And how do you use it in your trading? Keep reading to learn more.<\/p>\n\n\n\n
![](\"\/static\/img\/logo-htt-mini-blue.svg\"){kind=logo}
\n Table of Contents<\/span>\n <\/div>\n - \n
- What is the triple bottom pattern?<\/a><\/li>\n
- How to identify and use the triple bottom pattern?<\/a><\/li>\n
- How to trade the triple bottom pattern?<\/a><\/li>\n
- The triple bottom pattern – Pros and cons<\/a><\/li>\n
- Triple Bottom Pattern (VIDEO)<\/a><\/li>\n
- Key takeaways<\/a><\/li>\n <\/ul>\n<\/div>\n\n\n\n
What is the Triple Bottom Pattern?<\/h2>\n\n\n\n
The triple bottom pattern is a bullish reversal chart pattern that is formed after a downward trend and is composed of three consecutive bottoms and a resistance neckline<\/strong>. Following the breakout, there\u2019s often a trend reversal and a bullish trend begin. <\/p>\n\n\n\n
In terms of the structure, the triple bottom pattern consists of three failed attempts to break the support line at the same price level and then a breakout above the resistance neckline. When this happens, the breakout point indicates a bullish trend direction where a long position is taken.<\/p>\n\n\n\n
Generally, this technical analysis pattern has a similar pattern shape to other reversal patterns such as the double bottom pattern and the head and shoulders pattern. Obviously, it also works the same as the triple top pattern, which moves in the other direction and is, therefore, a bearish reversal chart pattern.<\/p>\n\n\n\n
How to Identify and Use the Triple Bottom Pattern?<\/h2>\n\n\n\n
A triple bottom formation occurs when the price of a currency pair cannot break below a certain resistance level<\/strong> and bounces back three consecutive times. Due to its clear pattern – it\u2019s fairly easy to identify the triple bottom pattern. <\/p>\n\n\n\n
Simply put, the pattern comes at the end of a downward trend and has three bottoms at the same level. The confirmation of the pattern occurs when the price breaks above the neckline, which serves as a resistance level. When this happens, sellers lose control and buyers take over. <\/p>\n\n\n\n
Taking a look at the EUR\/JPY 30-min chart<\/strong> below, we can see how the triple bottom pattern is formed in reality.<\/p>\n\n\n\n
![\"Triple](\"https:\/\/howtotrade.com\/wp-content\/uploads\/2022\/04\/Triple-Bottom-pattern-forex-trading.png\")
<\/figure>\n\n\n\nFollowing the downtrend, the price of the EUR\/JPY<\/strong> gets into consolidation mode with three attempts to break the support line. Once the price bounces back and breaks above the neckline, a bullish trend is confirmed and the pair continues to trade higher. <\/p>\n\n\n\n
Taking the above into account, here are the steps you need to take in order to apply the triple bottom pattern trading strategy:<\/p>\n\n\n\n
- \n
- Identify triple bottoms at a support line that appear after a bearish clear downtrend<\/li>\n\n\n\n
- Draw a resistance line around the highs of all price swings<\/li>\n\n\n\n
- Wait until the price breaks above the resistance neckline<\/li>\n\n\n\n
- Draw Fibonacci retracement levels or add the MACD indicator<\/li>\n\n\n\n
- Enter a long buying position with a stop-loss order at or slightly below the neckline <\/li>\n<\/ol>\n\n\n\n
How to Trade the Triple Bottom Pattern?<\/h2>\n\n\n\n
As mentioned, the triple bottom pattern<\/strong> is a bullish trend reversal indicator. This means, there is no confusion as to how to trade this pattern and essentially, a trader will be looking for the right entry point to buy the asset. This is done when the breakout occurs and the asset breaks above the neckline. <\/p>\n\n\n\n
To effectively use this chart pattern, it is also important to combine other technical indicators<\/strong> in order to confirm the reversal and to help you find the best price where you should place a stop-loss order.<\/p>\n\n\n\n
With that in mind, we are going to show two useful technical indicators to combine with triple bottom patterns – the MACD (Moving Average Convergence Divergence) and Fibonacci retracement levels. <\/p>\n\n\n\n
Moving Average Convergence Divergence (MACD) and Triple Bottom Chart Patterns<\/h3>\n\n\n\n
The MACD is a popular momentum indicator used to spot trend reversals. Basically, when you add the MACD indicator<\/strong> to a price chart with a triple bottom pattern<\/strong>, you\u2019ll be looking for a crossover at the exact level where the price breaks the resistance neckline. <\/p>\n\n\n\n
Using the same chart from the above example, we inserted the MACD to get another signal for a trend reversal. As you can see, the MACD crossover<\/a> occurs when the price reaches the resistance line and therefore, helps us confirm the trend reversal.<\/p>\n\n\n\n
![\"Triple](\"https:\/\/howtotrade.com\/wp-content\/uploads\/2022\/04\/Triple-Bottom-pattern-MACD.png\")
<\/figure>\n\n\n\nFibonacci Retracement Levels and Triple Bottom Chart Patterns<\/h3>\n\n\n\n
- How to identify and use the triple bottom pattern?<\/a><\/li>\n
![\"Triple](\"https:\/\/howtotrade.com\/wp-content\/uploads\/2022\/04\/Triple-Bottom-pattern-Fibonacci-levels.png\")
<\/figure>\n\n\n\n