Is the triple top pattern considered bullish?
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No, it is a bearish pattern.
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Triple Top Pattern
By Bajaj Broking Team
February 24, 2025
9 mins read
Technical Analysis
Synopsis:
In this blog, we will discuss the spinning top candlestick pattern and its meaning. We will talk about how to recognise the pattern and interpret it. We will also touch upon its pros and cons.
If a triple top pattern ever shows up in a trader’s charts, they must heed the warning it is sending their way; a strong uptrend could be turning in the opposite direction. The triple top pattern is a bearish reversal pattern, indicating a potential shift from bullish to bearish sentiment.
When the price tries to go past the same resistance level three times, three peaks are formed. However, the prices get knocked down each time, which indicates that the buyers just don’t have enough strength to break through. In between the three peaks, two small pullbacks can also be noticed.
When the third attempt fails, it becomes obvious that the resistance is holding strong. This is a sign that sellers are taking control and the chances of a downward reversal are increasing.
What is a Triple Top Chart Pattern?
The Triple Top pattern is a bearish reversal pattern that indicates the ending of an uptrend and the beginning of a downtrend.
Here’s a brief of the working: Here, the price makes three attempts to break through a resistance level. This forms three peaks on the chart almost at the same price. However, each of the three times, the price gets pushed back down. This is an indicator of the lack of strength of the buyers to keep the price going up. Ultimately, at the pattern’s lowest points, the price breaks below the support level. This confirms the price reversal.
Traders need to understand the “three-touch rule” of the market. Essentially, what this means is that if the market tests resistance levels three times and does not break through, then it is a sign of a shift from a bullish momentum to a bearish momentum.
How Does the Triple Top Candle Pattern Work?
The moment the Triple Top pattern appears on the charts, it is an indication of the buyers losing steam and sellers taking control.
From the very first peak, the bullish momentum begins to fade, leading to a small pullback, which can be noticed in the pattern between the peaks. The price tries to go up again without being able to break past the previous high, forming the second peak. This second failure is what gets the attention of bearish traders.
When the price makes one last attempt to push higher, however, it is not able to, and this is when sellers step in and overpower the buyers. This triggers a downtrend in the market.
Identifying Triple Top Patterns
The Triple Top pattern isn’t the easiest pattern to spot. However, with some practice, it does tend to get easier. To confirm the setup the pattern is trying to convey, it is better to rely on other tools like trendlines, oscillators, etc.
Here are a few steps to identify the pattern.
Traders need to start off by looking for a strong uptrend even before the pattern forms.
Picking up three consecutive peaks at almost the same level could be the pattern you are looking for. This should ideally create a horizontal or a sloping resistance line.
Two small pullbacks or dips between the peaks indicate the market’s push to drive the prices higher.
When traders see the volume dropping when the pattern is forming, it is indicative that the buying momentum is fading.
How to Interpret the Triple Top Pattern?
To understand the Triple Top pattern, traders need to be able to recognise what every single part of the pattern’s formation is trying to convey about price movements and market sentiments. Here’s a step-by-step breakdown of it:
Three Peaks at Comparable Levels
All three of the peaks that are formed in the pattern are the base of the formation. Here’s a look at what each of the peaks stands for:
First Peak: Initially, the first peak looks just like a normal pullback that happens during an uptrend.
Second Peak: However, when the same happens again and at the same level and ends up failing again, it indicates to the traders that the resistance is strong.
Third Peak: When the third failure takes place, it is a confirmation the buyers have not been able to push higher. As a result, this indicates a strong bearish trend pointing towards sellers gaining control.
Resistance Zone of the Triple Top Formation
The resistance in the pattern is represented by the horizontal line connecting the three peaks. This is basically the price level at which the market can’t break through, like a ceiling. This is the highest price traders will pay before the sellers take over.
Support Zone of the Triple Top Formation
A support level is formed between the three peaks in the form of two pullbacks. This is the price zone where buyers step in to prevent further decline. This price is crucial as a bearish reversal can only be established if the price falls below this.
Decline in Volume
There is a gradual decrease in volume with each peak that traders will be able to notice in the pattern. This means that the buyers are running out of steam, and the bullish momentum is fading. When the volume is low near the resistance levels, the greater the chances of a bearish reversal.
Breakout of the Triple Top Below the Support Zone
The Triple Top pattern is finally confirmed when the price drops below the support level, accompanied by a surge in volume. This signals the takeover of the sellers and indicates a downtrend.
Pros & Cons of the Triple Top Pattern
Here is a list of the pros and cons of the triple top pattern:
Advantages | Disadvantages |
The pattern acts as an early alert system that indicates a weakening of buying pressure and indicates a trend reversal. It helps traders prepare. | The chances of the price briefly dipping below support and then bouncing back also exist. Such fakeouts can lead to losing trades. |
Since the resistance and support levels are well-defined, traders can enter near the support with stop-losses to deal with risks better. | In case of unexpected breaks above resistance levels without reversals, traders would need to quickly exit as the pattern fails. |
According to research, when the support breaks, the pattern continues in the expected direction, providing a predictable outcome for traders. | The pattern works better in trending markets. In other conditions, they can frequently fail. |
This pattern keeps traders from making impulsive decisions as it encourages traders to wait for clear setups. | Works better when combined with other technical indicators, like volume or momentum oscillators. |
If the volume at the peak declines and increases at the breakdown, the pattern becomes more trustworthy. | If traders decide to enter too early, like at the second peak, the chances of failure increase. |
Triple Top Pattern vs Double Top Pattern
Here are some comparative points between the triple top pattern and the double top pattern.
The Triple Top pattern, with its three peaks, which are at the same level, provides additional confirmation when compared to the Double Top.
That third peak acts as a means of strengthening the resistance level, which further indicates a stronger bearish movement, thus increasing the chances of a price reversal.
Though the Double Top forms quicker than the Triple Top and provides signals earlier, due to fewer confirmations, it is less reliable.
There is no doubt that both patterns are important. However, due to the extra confirmation that the triple top provides, traders prefer it.;
Triple Top Pattern vs Triple Bottom Pattern
Here are some comparisons between the triple top pattern and triple bottom pattern:
While the triple top pattern is a bearish reversal pattern, the triple bottom is a bullish reversal pattern
This means that the triple top forms when the price hits the same resistance level three times and fails to break through, while the triple bottom includes the price hitting the same support level three times without breaking lower.
The triple bottom essentially suggests that sellers are losing control while buyers are gaining strength.
When is the Right Time to Use the Triple Top Pattern?
Though the Triple Top pattern is a powerful bearish reversal signal, its effectiveness depends on the market conditions. Here are some of the different conditions:
Bullish Market
Appears at the end of an uptrend, signalling the fading of the bullish momentum.
Here, when the price breaks below support with a volume spike, it’s a strong sign that sellers are taking over.
Bearish Market
In a downtrend, the pattern acts as a continuation pattern. This suggests that a temporary rally is over and that the downtrend will resume.
Traders can use MACD to confirm this
Sideways or Ranging Market
In markets where the prices move between support and resistance with no clear trend in sight, the pattern might indicate an upcoming breakout.
It indicates a downtrend when the price doesn’t break resistance three times and drops below support.
To confirm the same, traders can use indicators like RSI and moving averages.
How to Trade the Triple Top Pattern?
When used in the right manner, trading the Triple Top can be highly effective. Here are a few ways through which traders can trade the triple top pattern:
Spotting the Pattern
This is the most important one: traders need to learn to spot the pattern first.
A pattern where there are three peaks at similar price levels with two pullbacks in between will be the triple top pattern.
Setup Confirmation
Traders need to keep a lookout for a decline in volume, with each peak indicating the fading of the buying pressure.
Traders should also wait for a clear breakout below the support level.
Enter a Short Position
When the price breaks below support with high volume, it is time to go short.
This needs to be done at the breakout to make the best of the downward move.
Manage Risk with a Stop-Loss
A stop-loss just above the highest peak can protect traders if the price unexpectedly reverses.
Set a Profit Target
Having a clear profit target is key to maximising gains.
You can also set multiple targets to lock in profits at different levels.
Adjust as Needed
Traders can consider moving their stop-loss to break even if the market is moving in their favour.
Traders should be ready to adjust their strategy to the changing market conditions.
Exit at Your Target
When the price reaches the trader’s planned profit levels, it is important to exit on that high.
5 Key Mistakes to Avoid in Triple Top Pattern Trading
Here are the five mistakes that traders need to avoid when using the triple top pattern:
Ignoring Volume
Traders need to remember that volume is a key confirmation tool. Ignoring it could lead to traders falling for false breakouts.
A spike in volume when the price breaks below support levels is a confirmation that the pattern is dependable.
Jumping in Too Early
Trades should not enter the trade before they get a clear breakout.
It is important to wait for a strong move below support with high volume before entering a trade.
Placing Stop-Losses Too Tight
When traders set the stop-loss too close, even normal market fluctuations could knock them off.
Ignoring Market Conditions
Traders should not depend solely on the pattern and should check the broader market trend before making decisions.
Skipping Risk Management
Every trader needs to have a solid risk management strategy in place.
This could include proper stop-losses and trade diversification, to name a few.
Conclusion
The Triple Top pattern is a powerful tool in technical analysis, helping traders spot potential bearish reversals. By understanding how it forms, recognising it correctly, and avoiding common pitfalls, you can strengthen your trading strategy and make smarter, more confident decisions in the market.
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Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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Frequently Asked Questions
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What is the time frame for a triple top chart?
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The time frame is 3 to 6 months.
What does the triple top pattern signify?
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The triple top pattern indicates the ending of an uptrend and the beginning of a downtrend.
How reliable is the triple top pattern?
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Though the pattern is considered quite reliable, it is better to use it in combination with other analysis tools, too.
What is the best approach to trading a triple top pattern?
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Since the pattern is created at the end of an uptrend, the previous one also needs to be an uptrend.
Which indicators complement the triple top pattern most effectively?
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Works better when combined with other technical indicators, like volume or momentum oscillators.
When should you set a stop loss for the triple top pattern?
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A stop-loss just above the highest peak can protect traders if the price unexpectedly reverses.
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