The market and direct the stock back down to the support level. In this blog, Global Market Astro explains a significant chart pattern observed in day-to-day market charts i.e. Triple Top. These chart patterns serve as a vital tool in making global stock market trend forecasts.
TRIPLE TOP Reversal Chart Pattern
The triple top is a reversal chart pattern formed when a stock attempts to move beneath the key level of support in the direction of existing trend. This chart pattern signals the market’s effort to move a security in a certain direction. After three failure attempts, the buyers lose out hope, making the sellers to send the security in a downtrend.
Triple top is a bearish reversal chart pattern which is formed when a stock trending upward tests a similar level of resistance for three times without breaking the resistance. Every time the stock tests the resistance level, falls again to the similar level of support. After the third fall to the support, the pattern gets completed and the stock falls through the support and the stock price is expected to move downtrend.
The first step of this pattern is the formation of a new high in an uptrend that is slowed down by selling pressure, which forms a resistance level. The selling pressure initiates the stock price to fall until it finds a support level, as buyers involve again into the stock. The buying pressure sends the price once again up to the area of resistance the stock met earlier. Again, the sellers enter
This up-and-down movement gets repeated for the third time; but this time the buyers, after failing three attempts, give up on the stock, and the sellers take over. Upon falling through the support level, the stock is expected to move downtrend.
This pattern can be challenging to spot in the initial stages as it will firstly look like a double-top pattern. The most vital thing here is that one waits for the security price to move above the level of resistance before entering the trade, as the stock could just end up being range-bound, where it trades in between the two levels for some time.
In the triple-top formation, each test of resistance at the upper end should be aided with diminishing volume at each successive peak. And again, when the stock price breaks beneath the support level, it should be accompanied by high volume.
Once the signal is formed, the price objective is based on the chart pattern’s size or the price distance between the level of resistance and support. This is then deducted from the breakout point.