Triple Top

Key takeaways
* A triple top is a bearish reversal chart pattern that forms after an uptrend and consists of three consecutive peaks at roughly the same price level.
* The pattern is confirmed when price falls below the pattern’s support (the swing lows between peaks). Confirmation often coincides with rising volume.
* A common entry is to exit longs or enter shorts on the breakout below support. A stop loss is typically placed above the most recent peak.
* The typical price target equals the height of the pattern subtracted from the breakout point (support).

What is a triple top?

A triple top is a technical analysis pattern signaling a likely end to an uptrend. Price attempts to break a resistance area three times but fails each time, forming three similar peaks. The lows between those peaks form the pattern’s support (sometimes called the neckline). When price closes below that support, the pattern is considered complete and a further decline is expected.

The inverse pattern is the triple bottom, which signals a bullish reversal.

How the pattern forms

• Three peaks near the same resistance level.
• Two intervening pullbacks that create swing lows (the support).
• A decisive break below the support/neckline completes the pattern.

Visually it can resemble a head-and-shoulders formation, but in a triple top the middle peak is not markedly higher than the others. It is also an extension of a double top (with one additional failed rally).

Psychology and significance

• Repeated failure to clear resistance shows buyers are exhausted at that level.
• As price drops below support, early buyers may exit losing long positions and sellers initiate shorts, accelerating the decline.
• Not foolproof — breakouts can fail and price can recover above resistance. Confirmation and risk management are essential.

Trading the triple top

Entry
* Common trigger: enter short (or close longs) on a decisive close below the support/swing-low or trendline connecting the swing lows.
* Some traders wait for a retest of broken support (now resistance) before entering.

Confirmation
* Look for above-average volume on the break below support. Low volume increases the chance of failure.
* Use complementary indicators (e.g., bearish MACD crossover, RSI dropping from overbought) to strengthen conviction.

Stop loss
* Typical placement: above the most recent peak or above a recent swing high inside the pattern.
* To improve risk/reward, some traders place the stop inside the pattern (closer to entry) and accept that they trade a portion of the pattern’s height.

Price target
* Measure the pattern height: resistance level (peaks) minus support level (swing low).
* Subtract that height from the breakout point (support). Example: peaks at $36.50, support at $34 → height = $2.50; target = $34 − $2.50 = $31.50.
* Targets are estimates; price can fall farther or reverse sooner.

Alternative entries and exits
* Entering at the trendline break yields an earlier entry but may require a wider stop.
* Two targets can be used if traders count the pattern height from different breakout points (e.g., from the trendline or the recent pullback low).

Example (illustrative)

A stock makes three attempts near $36.50, pulling back to about $34 between attempts. Price breaks below $34 on rising volume. Short entry or exit of longs occurs at the break; stop placed above the resistance area; target computed by subtracting the pattern height from the $34 breakout (target ≈ $30.75–$31.50 depending on precise highs/lows). In practice the target may be reached or missed.

Special considerations and risks

• Frequency and duration: triple tops are less common than double tops and often take several weeks to months to form.
• Risk/reward: because stop and target distances are both derived from pattern height, risk and reward can be roughly equal. Traders may prefer setups where potential reward exceeds risk.
• False breakouts: always use confirmation (volume, indicator signals) and position sizing to limit losses.
• Combine with broader context: trend, support/resistance zones, and market conditions can affect outcomes.

FAQs

Is a triple top bullish or bearish?
* Bearish — it is a reversal pattern indicating a likely move from uptrend to downtrend.

How rare are triple tops?
* Less common than double tops because they require an extra failed rally, but they do occur regularly enough to be tradable.

How long does a triple top take to form?
* Commonly forms over weeks to a few months; major reversal formations often take three to six months but can vary.

Bottom line

A triple top is a bearish reversal pattern marked by three failed rallies to the same resistance and a subsequent break below the swing lows. Traders use the breakout, volume confirmation, stops above recent peaks, and a measured downside target (pattern height subtracted from the breakout) to structure trades. As with all chart patterns, confirmation and disciplined risk management are critical.