BAJAJ BROKING
February 24, 2025
8 mins read
You may have come across a day at the stock market where a stock/asset falls multiple times but then eventually reverses back high. When this happens with a stock or asset, it is termed a triple bottom pattern. When a stock hits a low three times (which is why it is called a triple bottom) but bounces back in the bullish trend, it can be a triple bottom chart pattern. So, it can also be called a bullish reversal pattern.
The question here is how do you perform this technical analysis so your market prediction goes right? Well, this technical analysis undoubtedly requires a deeper understanding of not just the market but of the stock market charts and patterns as well. So, read on as we explain the significance of the triple bottom pattern and how it can help you in the stock market.
A triple bottom chart or 3 bottom pattern is simply a technical analysis of the price movement of a stock/asset in the stock market. The trend shows three lows that hit the same or nearly the same price before it eventually bounces back in a bullish trend. The three lows roughly create a “W” sign. After three lows, the stock moves under the control of buyers from sellers.
So, in the beginning, the lows indicate that the sellers are controlling the movement while it ends up going in favour of buyers. The purpose of reading the three bottom patterns is to show that a stock's downtrend may come to an end and the price may start increasing. So, not just for buyers, it is also essential for sellers to maximise their profit.
For a trend to be termed a triple bottom pattern, a down-trending pattern must exist before triple lows occur. The three lows need not necessarily be at the same price but roughly the same price. In this trend, the price reaches the support level three times but is not capable of falling beyond this level. So, even though it is currently in the bearish trend, there is potential for a trend reversal that may pull back the price towards the bullish trend.
Traders need to carefully analyse the price movement and the falls to understand if it shows a triple bottom pattern. The first low in the trend may simply be a price movement while the second low is indicative of the bearish movement. However, even when the second low doesn't cross the support level, it can be indicative that the price may eventually increase. The third low that fails to fall beyond support may indicate mass surrender of bears (capitulation), thus, leading to a surge in price.
Before you enter the market, it is crucial to analyse the triple bottom pattern carefully. Here are some of the steps that you may follow:
The first step is to look for three consecutive lows. These must be around the same price level, creating a support area
Each low must be slightly higher than the previous one. This indicates a potential trend reversal
The minor pullbacks create a resistance level and you need to wait for the price to break above this resistance level to finally enter the bullish trend
Make sure to use stop-loss below the lowest point. It cuts on the losses that may occur if the trend reverses back toward the bearish market
Now, after assessing the price movement, you must decide on a target price. For this, you may measure the distance between the resistance level and the support point and then add it to the breakout point.
Additional Read: What Is a Candlestick Pattern?
To better understand the triple bottom chart pattern, here is an illustration for the same:
In the Indian stock market, let's consider the stock price movement of XYZ Company. For months, the stock price of XYZ company has remained low due to several factors affecting its price movement. However, now the trend reveals a reversal approach. Let's understand how it can be identified:
First low
The first price dip reached ₹70 per share of the stock. This price dip may put pressure on the sellers since buyers may end up selling stocks to limit their loss
Minor price increase
As a result of the first low, the price may increase since several investors may back out. So, suppose the price reaches up to ₹75
Second low
The stock again experiences a price fall again at ₹70. Here, the entry of various buyers may restrict further downtrend of the stock price
Minor pullback again
Concerned about the falling price, several investors may again exit, leading to another minor pullback. However, the price rise does not cross the resistance level of ₹75 again
Third low
Now is the final low, the third low, again at ₹70 forming a support area.
Breakout beyond resistance
The final pullback occurs and this time, the stock price increases and breaks the resistance level of ₹75 and increases above it. Thus, the stock price finally enters a bullish trend.
Identifying a triple bottom pattern may seem simple in theory, however, in reality, it requires keen analysis and a constant eye on the chart pattern. Here are some of the things you must look for in a three-bottom pattern:
The first step is to look for three consecutive falls in the price of a stock. This fall in price must be at or around the same price level
The volume must also drop throughout the pattern. It indicates the weakening strength of bears (sellers)
Look for the minor pullbacks that show a potential reversal of a downtrend. In a triple bottom pattern, the price eventually bounces back beyond the resistance level after three dips.
When you are planning to enter trade during a triple bottom pattern, make sure to have a strong risk management approach and a deep understanding of the market. Here are some of the factors you must keep in mind during the triple bottom pattern:
Analyse the pattern
The first step is to analyse the pattern carefully to confirm that it's a triple bottom chart pattern. Look for the three consecutive lows at around the same price and minor pullbacks
Technical analysis tools
Along with the chart pattern of the triple bottom, you may also use various other technical analysis tools to be sure of your predictions. You may use oscillators or moving averages for this purpose. Also, analyse the trend on a different time frames for a deeper understanding of the trend
Wait, confirm, enter
Try to avoid premature entry into the triple bottom pattern to avoid false predictions and losses. Wait until the breakout happens to enter the bullish market trend.
The triple top chart pattern is just opposite to the triple bottom chart pattern. In the triple top pattern, the price reaches three highs at or around the same price but fails to go higher than this support area. Each high is followed by a minor fall in price. Eventually, after three highs, the price falls significantly beyond the resistance level, thus entering a bearish market.
Here are some of the highlighting differences between the two:
Triple Bottom Pattern | Triple Top Pattern |
The triple bottom pattern indicates a potential trend reversal toward a bullish market | The triple top pattern indicates a potential trend reversal toward a bearish market |
During a triple bottom, the stock price falls consecutively for three times before increasing | In triple top, the stock price increases thrice before finally long dip |
Initially, the stock price is in the control of sellers but has the potential to trend shift towards buyers | Initially, the stock price is in the control of buyers but is indicative of a trend shift towards sellers |
It is crucial to carefully analyse the trend and understand the market scenario to have a better hold of the stock price movement.
The triple bottom pattern has its own set of advantages and disadvantages. You must be aware of these to make informed decisions. The table below shows the potential pros and cons of a triple bottom chart pattern:
Pros of Triple Bottom Pattern | Cons of Triple Bottom Pattern |
The pattern can be possible to identify easily as it has a unique movement | The accuracy of the pattern is not 100% just like every other technical analysisandol |
The pattern can be used to create support levels and risk-reward ratios | Even the the pattern indicates a triple bottom, there are chances that the price will fall beyond the support level |
One can use a triple bottom chart pattern in different time frames for different types of trading in the stock market | It is crucial to be patient and wait until the breakout happens to avoid potential losses |
Triple bottom chart patterns can be a helpful and powerful tool in analysing the price movement and market trend. By reading, understanding, and analyzing the price movement of the three bottom patterns and other technical tools, traders and investors can gain insightful learning and make informed decisions. However, make sure to be careful and very sure before entering 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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In the triple bottom pattern, three lows occur while in the double bottom pattern, only two lows occur. Both charts show the potential for a trend reversal.
The triple bottom pattern signifies the reversal trend in a bearish market. The price falls three times but fails to cross the resistance point, thus indicating a potential price surge where buyers may take control of the price movement.
Typically, after three bottom patterns, the stock price increases beyond the resistance level and enters the bullish market, where buyers get control of price movement.
Yes, triple bottom patterns typically indicate a potential bullish trend. This is because the price falls three times but roughly at the same level and fails to fall beyond this point. Thus, the third fall indicates a mass surrender of the seller which may lead the price control in the hands of buyers.
A triple bottom chart pattern is no confirmation of success. So, it is essential that traders carefully analyse the trend and make use of stop-loss before entering the market.
A triple bottom pattern typically has three lows of roughly the same price point. All three lows hit nearly the same low but do not cross this point. Before it occurs, there must be a downtrend existing. The volume drops throughout and is a sign that the bulls may gain control of the stock price.
Traders and investors can analyse the triple bottom chart pattern to predict the possible price movement. When the breakout happens, traders may enter the bullish market, predicting further price increases.
Yes, there is the potential of a triple bottom pattern to further fall in price. Even after three dips and minor pullbacks, the price may fall beyond the support price.
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