Stock Market Trading: Triple Bottom Chart Pattern

4
2008
stock market trading: triple top chart pattern

The triple bottom chart pattern is a classic price pattern for stock market trading. It’s a trading pattern that can be used to enter a trend reversal. It can also be used to exit a trade at the end of a trend.

This video and article gives you a 4-step process for accurately trading triple bottoms.

Of course, you can flip the pattern upside down and use these same 4 steps to trade a triple top on stocks, Forex and futures.

Enjoy the video and please leave your comments below.

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VIDEO TEXT:

Thank you for joining me for this video. Today we’re going to look at stock market trading the triple bottom chart pattern. This can be used to either exit a trade, if you’re already in a trend trade to the downside. Or can also be used as an entry to go long. So I’ll show you both ways that this works. And the 4 steps to trade this with fantastic accuracy.

Alright. So by the way this is a follow up video to the double top trade strategy that I used for stock market trading, and you might want to check that one out on my video tube, or my YouTube as well. So let’s talk about this though and there’s 4 steps. We’re going to expand a little bit on the double top strategy and add a few things and answer a few questions that came from that video.

STEP 1 TO TRADING A TRIPLE BOTTOM CHART PATTERN

So before you can get any type of bottoming pattern, in this case a triple bottom, you need to have a trend, so that’s step 1, is you don’t have a bottoming pattern, in this case a triple bottom. Until you’ve had a trend. You might have equal lows but you do not have a triple bottom.

STEP 2

Step 2 is the cycle low. We’ve got an extended trend here in 5 and 7. That’s what we are looking for, especially if you are going to go long. As you know, the trend is your friend until the end. I’m sure you’ve heard that. So therefore when the trend is extended, it’s no longer your friend, and that’s the timing when we are looking to then take a trend reversal trade. So the timing of it has to do with 2 things. Number 1, how long that trend’s been going. 5 is average, 7 is extended. So now the odds are no longer in favor of those who are going short. And then we look at our timing indicator down here as well. This little pattern on the indicator is key to timing your entry on the triple bottom chart pattern.

And by the way if you are interested in my cycle indicator, I am happy to share that with you absolutely free. I do free webinars once in a while where I give that indicator away and give you a tutorial on how to use it and teach you that pattern and some other stuff.

Feel free to send me an email at Barry@topdogtrading.com, and request that indicator. And I’ll let you know when the next webinar is coming up, where I give it all away for free. I normally sell this, but for my YouTube friends I do offer it for free. Just subscribe to YouTube and then it’s really for my subscribers. So subscribe and you are in. it’s pretty easy. Click the little red button down there.

STEP 3

Okay let’s talk about step number 3 in trading the triple bottom chart pattern. So step 3 is a momentum shift. Now what do we mean by that. Oh, first of all, let me draw on here the triple bottoms. So that it’s real clear, just want to make sure everybody can see this. So there it is and what we are looking at is, that’s 1, that’s 2 and that’s 3. Alright. So that’s the triple bottom, just to make sure. I always see these things, I got to make sure other people that are on board see this as well.

Okay, so then we look at the momentum shift. Now the momentum indicator is down at the bottom. And that is just a regular momentum indicator. Let’s see, I think we are going to be able to do that. Yeah, I am going to have to take those arrows off okay. So let’s bring up our horizontal line again. So as we are looking at these 3 lows.

Here’s our momentum indicator. It’s just the indicator called momentum and it’s a 14 period by the way, if you are interested. So at this point you see, momentum is still about the same. And then here it still makes a lower low and, well lower high and lower low. And then here is our momentum shift. Boom. It comes cranking up above here and so that’s why when we get to this spot here, we get the third low. Remember that’s 1, 2 and then here’s number 3. Look where momentum is now. Its way up there, that’s your momentum shift. So way different than it was here or here.

I want to wait for that. Momentum by the way will often lead price. It is a potential leading indicator. And what’s happening down here often with these triple lows is accumulation is happening. You’ll notice the market doesn’t really go up too much. So what’s happening is often accumulation and they try to keep price low because they want to keep buying at a lower price. And I have to pay a higher price. But the momentum shift is revealed even though you can’t necessarily see it too easily and the price pattern, and that’s why the indicator just makes it super clear. That’s step 3.

STEP 4

Now step 4 to being successful with the triple bottom chart pattern is support. We want to have some sort of support coming into that. So when you are trading a trend and you are looking for future support, Fibonacci trade extensions are real good. And we just go from a major swing high to a swing low to swing high. And yup just happens to come in there and 138.2. So from this high to this low is a measured move. 100%’s a measured move. And then from there to there, it’s 138.2. So we do have a support level Fibonacci extension.

Alright now let’s talk about where to actually get in to this thing. So the traditional approach is to wait for the market to break above the high that is between these 3 lows. So that would be up here. And they would get in over here. For me that’s late. So that means you’d get in here. And that’s conservative.

It’s not a bad entry but to me it’s just too late. Well the whole market of professional traders is that we like to get in early, and before the retail orders. And so that’s what I like to do. So I would like just get in cycle low with momentum cranking up, and I would get in one penny above the high of that bar. I’ll go ahead and draw that in for you. Earlier this is the main bar right there. One penny above the high of that bar put my stock one penny below the low of that bar and that’s it. And then I’m in, so very very little risk, one bar risk.

YOUR DESIRED RESULT

My goal in the triple bottom chart pattern is to catch a trend going in the opposite direction. And that doesn’t always happen by the way. Let’s just be clear on that, doesn’t always happen. But in this case it does. And that is the purpose of a trend reversal trade, is to catch a new trend in the opposite direction before it is confirmed.

Once it’s confirmed, everybody sees it, you’re too late to the party. Again 5 waves is the average. So I’ll be getting out at wave 5, combined with that cycle higher high, again momentum coming down, great exit. And so look at this, this is what’s so great about trend reversal trade, is they are the single best risk to reward ratio trade there is. So my risk is that bar. My reward is you know something like that. So huge reward at tiny risk. And of course that’s what we are always looking for.

So that is it. That’s the stock market trading triple bottom chart pattern, test it out on your own. Look for it, and look for these various factors.

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