42 Chart Patterns for Effective Intraday, Swing & F&O Trading

It’s best to wait for confirmation before taking trades based solely on projecting the pattern completion. Utilizing the triple top pattern provides objective, high-probability trading opportunities with defined risk. Combining pattern analysis with prudent risk management practices enhances overall trading performance. It exemplifies using probability theory and technicals to identify favourable trade setups.

The falling wedge pattern is a bullish chart pattern marked by lower highs and lower lows converging towards a single point. The falling wedge appears on the chart as converging trend lines – a descending upper trendline connecting at least two lower highs, and an ascending lower trendline connecting at least two higher lows. This forms a wedge shape that narrows as the trend lines move closer together. The rejections from the trendline resistance and certain lower lows before touching the trendlines are taken as solid indications to go bearish on the trade setup. However, risk averse and conservative traders often wait for additional confirmation. As in the image uploaded above, conservative traders will wait for the horizontal support to finally break and retest this broken support.

These patterns often provide insights into short-term price movements and sentiment shifts. To confirm a triple top pattern, traders watch for a decisive break below the neckline, which connects the lows between the peaks. Increased trading volume during the breakout strengthens the confirmation, indicating strong seller interest. Technical indicators like the Stochastic Oscillator showing bearish divergence can provide additional validation.

Traders prepare for reversals in advance rather than reacting after the fact. The size of the pattern varies depending on the timeframe and volatility of the security. On lower time frames like hourly or 15-minute charts, the tops form over just a few days. Larger patterns that form over longer time frames are considered more significant. In a triple top pattern, the RSI helps confirm whether the asset is overbought, signaling that a bearish reversal is likely to follow. For example, if the highest peak in the triple top pattern is $50, place your stop loss slightly above this level, say at $51.

This consolidative phase accumulates sellers till a point, wherein the buyers manage to continue the original trend after a proper breakout. In the above mentioned example, observe how a clean breakout occurred with a huge gap up. The horizontal zone that acted as a resistance is a potential new support structure. Observe how price managed to retest this horizontal resistance and turned support to invite buyers into another leg of trend continuation.

Triple Top vs. Triple Bottom Patterns

The peaks are formed when the price hits resistance but fails to push through, while the troughs occur when the price retraces after each failed attempt. The fourth triple top pattern trading step is to place a stop-loss at the high point of the support breakdown candlestick. The likelihood of fully forming the Triple Top pattern ranges from 60% to 70%, depending on the specific variation of the pattern.

The inverse head and shoulders pattern is a trend reversal formation, which predicts an uptrend turning into a downtrend. The inverse head and shoulders consists of three troughs, with the middle trough being the lowest (the ‘head’) and the two either sides being higher and roughly equal (the’shoulders’). The pattern consists of lines indicating price movements (Price Line) and neck lines (Neck Line).

1. In the example above, observe how higher highs are forming since the beginning of the consolidation.
2. Decreasing volume and volatility reflect a stabilizing period where supply and demand momentarily balance out.
3. Other technical indicators and chart patterns may also be used in conjunction with the triple top.
4. Finally, after breaking below the neckline, there is often a retest of this level.
5. The  bump-and-run pattern consists of an initial extended trend or ‘bump’ in the price, followed by a brief but steep trend in the opposite direction or ‘run’.
6. A descending staircase pattern is considered a continuation pattern, signaling that the prior downtrend is likely to persist.

For example, a 15-minute timeframe price chart means a triple top pattern will take a minimum of 20 hours (15 minutes x 80) to form. Thirdly in the triple top formation process is the bearish price breakdown which is caused by prices dropping below the support point, marked by a series of lower highs and lower lows. A triple top pattern is a reversal pattern signaling price reversals and is not a continuation pattern. The triple top pattern continues the double top pattern, but this pattern is considered more reliable as its resistance level gets tested three times instead of two. If the pattern breaks and transforms into a channel, we can continue to open trades at new peaks until the price exits the channel. The longest channel I have had included eight trades and seven of them were closed with profits.

Importance of trading the Triple Top Pattern in Technical Analysis

The higher the time interval, the higher the probability of formation. The triple top signals a market reversal and is not a signal to open a trade. The pattern’s signal to enter the market lags and becomes relevant when almost all other signals indicate a trend reversal, which increases the chances of success. The pattern is also mistaken, for example, for the head and shoulders pattern.

Triple Top Pattern vs Other Trading Patterns

The broadening bottom pattern is a bullish reversal pattern that signals potential strength in the downtrend. The broadening bottom pattern forms when the price makes successively lower lows and higher highs, resulting in diverging trend lines drawn connecting the lows and highs. The rising wedge is a bearish pattern that forms when the price rallies between upward-sloping support and resistance lines that are converging. The rising wedge pattern has two converging trend lines that connect a series of higher highs and higher lows, forming a wedge shape that slopes upward as prices rise over time. The rising wedge in market psychology, reflects the growing disillusionment among buyers, like in the image below.

1. The stock quickly broke below trendline support at $34 and continued to decline on escalating volume.
2. Of course, first and second peaks are perfect point to place sell orders.
3. The higher the time interval, the higher the probability of formation.
4. For example, if the pattern’s swing high price is $40 and the pattern’s support level is $30, the distance between the swing high and the support level is $10.
5. If they come down to the same level a fourth time, they usually decline.

What Is The Psychology Behind a Triple Top Pattern?

Look at the example attached above to study how trades are initiated. The Diamond Top is a reversal pattern that signals the transition of an uptrend into a downtrend. The diamond top pattern forms when the price of a stock rises to a new high and then declines, forming a peak. This peak is followed by a moderate rise and fall that forms the upper and lower sides of the diamond shape, indicating a potential reversal of the prior uptrend, as seen in the image below. As a continuation pattern, the expectation is that the prior uptrend will resume with another sharp increase after the sideways channel is broken to the upside.

The pattern reflects changing market psychology, and triple top chart pattern reversal signals prove profitable. However, like with any technical indicator, the triple top should not be used in isolation. Considering price action, momentum, volume, and other chart factors improves accuracy. Strict criteria around peaks, troughs and break levels help avoid false signals.

A Triple Top is a chart pattern that consists of three equal highs followed by a break below support. The opposite of a bearish triple top pattern is the bullish triple bottom pattern. Then draw a support neckline from left to right that connects the swing low points of the pattern together. Triple top patterns form on bar charts, candlestick charts, open high low close charts (OHLC), point and figure charts, area charts, and line charts. The pattern works across all time frames, but its accuracy improves with larger time intervals.