Profitable Forex trading is all about conducting a proper analysis and trading using a working strategy. Traders analyze markets using technicals and fundamentals. For technical analysis, chart patterns play an important role. Triple Top is a popular pattern that is used by technicians. But what is Triple Top exactly and how to use it in Forex trading? Let’s find out.
Triple Top definition
Triple Top is a Forex chart pattern that indicates that the uptrend is coming to an end and we should expect a change in market direction. Triple Top is a bearish reversal pattern that consists of three highs that are equal in size. The pattern is complete and ready to trade once the support trendline gets broken and the candle closes outside the line.
Why is Triple Top Important for Traders?
- Using the Triple Top chart, traders can predict upcoming market movements and act accordingly.
- Understanding Triple Top in trading can save long positions and signal to close the trades before the reversal beggins.
- Triple Tops offer good risk to reward ratios and appear frequently on the charts.
- Triple Top meaning can be easy to understand and spot, which means that everyone can use it.
Thorough Triple Top Explanation
Now let’s look at the more thorough explanation of Triple Top. As we have already mentioned earlier, understanding Triple Top in trading is not difficult. The chart pattern indicates an upcoming downtrend. It consists of three highs that are equal in size. The final formation of Triple Top happens when price drops below the resistance level. This indicates that prices failed to break the top barrier and a massive sell is about to take place.
Triple Top is commonly used with other chart patterns and the most common pair is with Triple Bottom. Triple Bottom is the opposite of Triple Top and indicates that the downtrend is about to end and prices are expected to rise. Therefore, if you learn how to trade the Triple Top, you’ll be able to trade Triple Bottom too.
Example of Triple Top in Forex
If you are still confused about Triple Top let’s look at the Triple Top example and understand its meaning better. In order to trade the Triple Top chart pattern the right way in Forex, you should always wait for the pattern to make 3 highs that are similar in size and the price to fall below the support line. Once the trendline is broken, a short position can be opened, and stop loss can be placed above the broken trendline support. The profit target depends on the strength of the newly established trend.
FAQs on Triple Top In Forex
Is Triple Top bullish?
No, Triple Top is a bearish reversal chart pattern. The pattern appears in an uptrend and after the support trendline is broken, the pattern predicts the price will start moving downwards. On the other hand, Triple Bottom is a bullish counterpart of the Triple Top chart pattern.
What happens after Triple Top?
When Triple Top takes place on the market, it is expected that prices will start to fall as assets failed to break the top barrier three times in a row. It is expected prices to keep falling after the pattern is complete, however, the exact extent is unknown and depends on the strength of the new trend.