Triple bottom

A triple bottom forms when price drops into the same support zone three times and gets pushed back each time. The three lows sit at roughly the same level. The line through the two peaks between them is the neckline. It's a double bottom with one more attempt; unlike an inverse head and shoulders, the middle low isn't deeper than the others.

The story: sellers tried three times to push price below that support and failed every time. Buyers were waiting in the same place on each visit. At the end of a decline, it tells you selling pressure is running out.

Three lows on their own aren't the pattern, though. Until price closes above the neckline, what you have is a support that has held three times, the bottom edge of a wide range. The turn is confirmed when the peaks between the lows are cleared on a close. That changes where you trade and where your stop goes.

Start with a decline; three lows inside an uptrend are just a pause. Then look for three lows in one zone, say 1.0710, 1.0704 and 1.0712. They don't need to match to the pip. There should be clear bounces between them, here both topping out around 1.0850. That's a wide range roughly 145 pips tall.

Watch how price reaches the third low. Shrinking candles, long lower wicks at support and closes holding above the level all say selling is fading. Sometimes the third low wicks a few pips under the first two and snaps back. That's a sweep of the stops below, and if the close holds above the level, the structure is intact.

There are two separate trades here. The first is buying a rejection at support. Buy at 1.0716 with a stop under the wick at 1.0690 and you're risking 26 pips; that's your 1R. Resistance is 134 pips above, so on paper there's room for about 5R. Strictly, that's a buy at a range's bottom edge, not a triple bottom trade.

The second is the pattern itself: a close above the neckline. Only then is the downtrend's structure really broken. But by then your stop under the lows is more than 150 pips away. The textbook target projects the range's height up from the break; treat it as a rough reference at most.

Counting the pattern before it's finished. The moment price tags the third low, people call the triple bottom complete, but price has only touched support a third time. Buying a rejection there is a valid idea; just know it's an edge trade and size the risk for that.

Buying support with no rejection at all. If price drives into the level on big red bodies without pausing, the third attempt can end differently from the first two. Look for a sign: a lower wick, shrinking candles, a close back above the level.

Squeezing the stop just under the lows, where everyone else's sits. The area beneath a support tested three times is a big stop pool, and price wicking into it before turning is common. Give it room and cut the size if the distance grows.

Every visit to the same level uses up some of the buyers there. So the third test can go either way: the support holds once more, or this time it gives. If the highs keep falling, meaning price reaches support from weaker and weaker bounces, the pressure is downward and a break becomes more likely.

When a sharp downtrend is running on the higher timeframe, a triple bottom on the small chart is often just a pause. If the 4-hour chart is still making lower highs, three lows on the 5-minute may be a rest before the next leg down.

Also check the width of the range. If there's little room between the lows and the peaks, even a buy at support may not leave 1R of distance to resistance.