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Written by and copyright © 2005-2009 by Thomas N. Bulkowski. All rights reserved.
Three peaks and domed
house and its mirror, domed house and three peaks, are patterns discovered by George Lindsay
certainly before its publication in 1971 in Encyclopedia of Stock Market Techniques.
I searched for this pattern extensively for inclusion in the first edition
of my book
Encyclopedia of Chart Patterns, Second Edition  (pictured on the right),
but I couldn’t find enough samples, so I never included it. George says it appears
in the Dow Jones industrial average.
I think you will find that the more complicated the
chart pattern, the less often they appear in a stock, or in this case -- the Dow Jones
industrial average -- and the less often they work as expected. Three
peaks and domed house with domed house and three peaks -- both chart patterns are very
complicated as you will see.
It might be easier to treat the pattern as two separate ones, a triple top and
rounded top or head-and-shoulders top, and trade them as individual patterns.
Three Peaks and Domed House
Domed House and Three Peaks
Three Peaks and Domed House
Identification Guidelines
The following guidelines identified by George are keyed to the above figure.
| Point | Discussion |
| 3, 5, 7 | Look for three peaks rising from the base at point 1 and 2 in a sharp price uptrend to peak 3. |
| 3 | The peak usually looks somewhat flat on top. |
| 4 | Price retraces the rise from 2 farther than expected. |
| 4, 6, 8 | Price drops to the valleys between the peaks. |
| 5, 7 | The peaks appear similar in shape and top out near the same price as peak 3. Symmetry between the three peaks is usually obvious. |
| 3-7 | The three peaks take about 8 months to form, give or take. |
| 8, 9, 10 | A severe drop begins, taking price down to point 10 in two waves, 7 to 8 and 9 to 10. This forms what’s called the “separating decline”
which separates the three peaks pattern from the remainder of the formation. |
| 10 | Always lower than either points 4 or 6 but often both. If that doesn’t happen, then it’s not a separating decline. |
| | After you have a valid separating decline, look for a domed house pattern. |
| 10-14 | Price forms a base leading to the dome. Price must rise from the low at 10 and then must form two more lows at 12 and 14. |
| 14, 15 | Price rises to the peak at 15 in a swift advance, forming the “wall of the first story.” |
| 15-20 | This is the “roof of the first story,” composed of 5 reversals beginning with the first one at 16 and ending at 20. The price movement has
changed from upward in the first story wall (points 14 to 15) to a horizontal but choppy sideways move 15 to 20. |
| 20 | The rise resumes at point 20 forming the “wall of the second story,” which takes price to 21. |
| 21-25 | Price moves in a choppy manner forming a dome or roof on the second story. |
| 14-23 | The move from points 14 to 23 takes 7 months, and 8 to 10 days. |
| 25-27 | After peaking at 25, price tumbles to 26, retraces to 27 before heading lower to 28, completing the pattern. Point 27 often tops out near the price level
of point 15, forming the right edge of the first story roof. |
| 28 | Price bottoms near point 10. This decline may not be a straight-line affair, but it always happens. |
| 14-15 vs. 27-28 | The rise from 14 to 15 balances the decline from 27 to 28. |
| 20-21 vs. 25-26 | The rise from 20 to 21 balances the decline from 25 to 26. |
George gives several examples and I list them here.
July 26, 1893 (point 1) to Sep 4, 1895 (point 23) in the Dow Jones 20 stock average.
July 26, 1910 (point 1) to Sep 30, 1912 (point 23) in the Dow Industrials.
October 1946 to November 1948
September 1964 to May 1966
October 9, 1966 to January 8, 1969.
Point 3 to point 23 in the Dow Industrials:
Oct 22, 1915 to Nov 21, 1916
June 5, 1919 to Nov 3, 1919
Sept 11, 1922 to Mar 20, 1923
Feb 5, 1929 to Sep 3, 1929
Nov 17, 1945 to May 29, 1946
Sep 13, 1951 to Jan 5, 1953
Apr 6, 1956 to Jul 12, 1957
Aug 3, 1959 to Dec 13, 1961
Domed House and Three Peaks
George then shows the mirror of the pattern, forming a domed house followed by three peaks. One
example is from April 1938 to June 1940 with others from December 8, 1890 to April 5, 1893 (Dow Jones 20 stock average)
and Sep 24, 1900 to Feb 16, 1903 (Dow Industrials) and Dec 15, 1905 to Jan 7, 1907.
-- Thomas Bulkowski
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