1. What is important in Triple Bottom Pattern?
- Structure: It looks like three consecutive troughs at roughly the same price level, separated by moderate peaks.
- Bullish Signal: It indicates that after testing support three times, sellers consistently fail to push prices lower, showing strong demand at that level.
- Breakout Point: The bullish confirmation comes when the price breaks above the resistance line (the neckline) formed by the peaks between the bottoms.
- Psychology: It reflects repeated attempts by sellers to break support, but buyers defend it each time, eventually leading to a strong upward reversal.
2. Who Invented or Used It First?
Historical Roots:
The Triple Bottom is part of classical chart patterns studied since the early 20th century.
Early Contributor / Analyst:
The pattern was documented and analyzed by
Richard W. Schabacker
One of the earliest pioneers to formalize chart patterns
Further Development & Standardization:
Robert D. Edwards and John Magee
They expanded and standardized patterns like Triple Bottom
Modern Analysts & Educators:
Played a key role in bringing classical patterns into modern trading
3. Who Used It in Practice (Real Traders)
Used accumulation and reversal concepts similar to Triple Bottom
Focused on breakout strategies after consolidation zones
These traders didn’t name the “Triple Bottom” explicitly but used similar logic: accumulation → breakout
4. How Much Did They Invest & Profit Using This Pattern?
Important Reality: There is no verified public data showing exact investment amounts or profits specifically from Triple Bottom trades. These patterns are part of broader trading systems.
Richard W. Schabacker
Primarily an analyst and author
No disclosed trading capital or profits
Contribution: theoretical foundation of chart patterns
Jesse Livermore
One of the most famous traders in history
Made and lost millions of dollars multiple times
Used price action and reversal strategies similar to this pattern
Nicolas Darvas
Turned $10,000 into $2 million
Used breakout strategies based on consolidation zones
John J. Murphy
Focused on education and analysis
Did not publish specific trade profits
5. Key Insight
Triple Bottom is more reliable but slower
Works best when:
- Strong support holds across all three bottoms
- Volume increases on breakout
Always combine with:
- RSI / MACD
- Trend confirmation
- Risk management
6. Profitability & Use in Trading
- Traders’ Success: Many traders have profited by spotting major bottoms with this pattern, especially after prolonged downtrends.
- Institutions & Individuals: It became a staple in technical analysis, used to identify potential reversals in stocks, commodities, forex, and crypto.
- Profit Potential: When confirmed with volume and broader market context, it often precedes strong bullish rallies, though it takes longer to form than a Double Bottom.
7. Why It became Famous?
- Reliability: Considered one of the stronger reversal patterns because it requires three failed attempts to break support.
- Simplicity: Easy to recognize visually, though it takes more patience to wait for confirmation.
- Educational Spread: Featured in nearly every technical analysis textbook and trading course.
- Market Psychology: It captures repeated battles between buyers and sellers, showing strong accumulation at support.
- Broad Application: Works across multiple asset classes, making it universally useful.
Quick Recap
- Key Idea: Signals a bullish reversal after testing support three times.
- Origin: Documented by Schabacker and Edwards & Magee.
- Profitability: Yes, widely used by traders to capture reversals.
- Fame: Reliability, strong psychological basis, and broad application made it a cornerstone of chart analysis.
1. Pattern Overview
Pattern Type
Bullish Reversal Pattern
Professional Definition
The Triple Bottom is a bullish reversal chart pattern that forms after a prolonged downtrend. It consists of three consecutive troughs at approximately the same price level, separated by moderate peaks. A breakout above the resistance level (formed by the intervening peaks) confirms the reversal and signals the potential start of a new uptrend.
Market Psychology
- First Bottom: Sellers dominate, driving prices lower. Buyers step in, creating temporary support.
- Second Bottom: Sellers attempt another decline, but buyers defend the same support level, showing accumulation.
- Third Bottom: A final attempt by sellers fails to break support, reinforcing bullish sentiment.
- Breakout: Buyers overpower sellers, breaking resistance and shifting market psychology toward optimism and trend reversal.
Statistical Success Rate
According to Thomas Bulkowski’s Encyclopedia of Chart Patterns, the Triple Bottom pattern has a success rate of approximately 72–76% for upward breakouts.
Average Price Move After Breakout
The projected move is typically equal to the pattern height (distance from resistance to support). Average gains range from 15–30% in trending markets.
Ideal Market Conditions
- Appears after a prolonged downtrend
- Performs best in moderate volatility environments
- Strong momentum markets enhance reliability
Comparison With Similar Patterns
- Versus Double Bottom: Triple Bottom has three troughs, offering stronger confirmation than the two-trough Double Bottom.
- Versus Inverse Head and Shoulders: Both are bullish reversal patterns, but the Triple Bottom has equal troughs, while the inverse head and shoulders has a deeper middle trough.
- Versus Rounded Bottoms: Rounded bottoms are gradual reversals; triple bottoms are more structured and defined.
2. Step-by-Step Formation Structure
Required Prior Trend
A clear downtrend must precede the pattern.
Stage-by-Stage Development
- Initial decline forms the first bottom
- Recovery to resistance (first peak)
- Second decline forms the second bottom near the same support level
- Recovery to resistance (second peak)
- Third decline forms the third bottom at support
- Breakout above resistance completes the pattern
Support Level Formation
Support is established at the troughs of the three bottoms.
Resistance Level Formation
Resistance forms at the peaks between the troughs.
Trendline Drawing Rules
- Draw a horizontal line across the troughs (support).
- Draw a horizontal line across the peaks (resistance).
Minimum Pattern Requirements
- Three distinct troughs at similar price levels
- Two intervening peaks between troughs
- Resistance line with at least two touches
Volume Behavior During Formation
- Volume decreases during each bottom formation
- Light trading during consolidation
- Volume expansion expected at breakout
3. Breakout Structure
Exact Breakout Location
Occurs when price closes above the resistance level formed by the intervening peaks.
Breakout Candle Characteristics
- Strong bullish body
- Close above resistance
- Preferably accompanied by high volume
Confirmation Rules
- Daily close above resistance
- Volume spike
- Follow-through in subsequent sessions
Volume Behavior During Breakout
Expansion confirms strong buying interest and validates breakout reliability.
Trader Signal Interpretation
Breakout signals reversal of the prior downtrend and entry opportunity for traders.
4. Trading Strategy & Mathematical Formulas
Entry Strategy
- Aggressive Entry: Enter immediately after breakout confirmation.
- Conservative Entry: Wait for retest of breakout level (resistance becomes support).
Target Price Calculation
Pattern Height Formula
Pattern Height = Resistance Level - Support Level
Bullish Target Formula
Target Price = Breakout Level + Pattern Height
Stop-Loss Placement
- Bullish Breakout: Below support or third bottom low
Risk–Reward Ratio Formula
Risk–Reward Ratio =
Target Price – Entry Price
Entry Price – Stop Loss
Example Calculation
- Entry Price = 50
- Resistance Level = 50
- Support Level = 40
- Pattern Height = 10
- Target Price = 60
- Stop Loss = 47
Risk–Reward Ratio =
(60 − 50)
(50 − 47)
=
10
3
= 3.3 : 1
5. Volume Analysis Rules
- Volume decreases during each bottom formation
- Contraction continues during consolidation
- Expansion at breakout confirms strength
- Weak volume breakouts may indicate false signals
6. Key Identification Features
- Three troughs at similar price levels
- Two intervening peaks between troughs
- Horizontal support and resistance lines
- Trendlines drawn across troughs and peaks
Typical Timeframes
- Intraday charts (short-term reversals)
- Swing trading charts (daily)
- Positional trading charts (weekly)
Bullish Nature
The pattern signals reversal of a downtrend, making it inherently bullish.
7. Failure Conditions & Invalidation Rules
- False breakout with weak volume
- Opposite breakout below support
- Early warning: third bottom breaks significantly lower than first two
- Invalidation if price fails to hold above resistance after breakout
- Risk management: always use stop-loss placement
8. Common Trader Mistakes
- Entering before breakout confirmation
- Ignoring volume signals
- Confusing with triple tops or other consolidation patterns
- Placing stop-loss too close to support
- Trading in sideways or weak markets
9. Chart Description
The Triple Bottom pattern begins with a downtrend. Price forms a trough (first bottom), then rebounds to resistance (first peak). Price declines again, forming a second trough near the same support level, followed by another rebound to resistance (second peak). A third decline forms the final trough at support. A breakout candle closes above the resistance level with strong volume. Traders project the target by adding the pattern height to the breakout level. Volume expansion confirms the breakout’s reliability.