As of 12/20/2024
Indus: 42,840 +498.02 +1.2%
Trans: 15,892 +32.54 +0.2%
Utils: 986 +14.76 +1.5%
Nasdaq: 19,573 +199.83 +1.0%
S&P 500: 5,931 +63.77 +1.1%
|
YTD
+13.7%
0.0%
+11.9%
+30.4%
+24.3%
|
 44,200 or 41,750 by 01/01/2025 16,100 or 17,700 by 01/01/20251,050 or 975 by 01/01/202520,500 or 19,300 by 01/01/20256,100 or 5,775 by 01/01/2025 |
As of 12/20/2024
Indus: 42,840 +498.02 +1.2%
Trans: 15,892 +32.54 +0.2%
Utils: 986 +14.76 +1.5%
Nasdaq: 19,573 +199.83 +1.0%
S&P 500: 5,931 +63.77 +1.1%
|
YTD
+13.7%
0.0%
+11.9%
+30.4%
+24.3%
| |
|
44,200 or 41,750 by 01/01/202516,100 or 17,700 by 01/01/20251,050 or 975 by 01/01/202520,500 or 19,300 by 01/01/20256,100 or 5,775 by 01/01/2025 | ||
For more information on this pattern, read Encyclopedia of Chart Patterns, 3rd Edition. If you click on the link and then buy the book (or anything) during the visit at Amazon.com, the referral will help support this site. Thanks.
$ $ $
Trading lessons added 6/25/24.
Triple bottoms are somewhat rare chart patterns. That makes sense because three bottoms seldom line up like soldiers at attention. They have a reasonable break even failure rate and decent average rise in a bull market, giving them a solid performance rank.
The above numbers are based on more than 2,500 perfect trades. See the glossary for definitions.
| Characteristic | Discussion |
| Price trend | Downward leading to the pattern but should not drop below the first bottom. |
| Shape | Three distinct valleys that look similar. |
| Bottom price | The price variation between bottoms is small such that it appears the three valleys bottom near the same price. Allow variations. |
| Confirmation | The pattern confirms as a true triple bottom once price closes above the highest peak between the valleys. |
| Volume | Usually higher on the first bottom than on the last, trending downward 61% of the time, but it may peak beneath each valley. |
| Trading Tactic | Explanation | 
The Measure Rule
Trendline
Flat Base
Shelf
|
| Measure rule | Compute the height from the highest peak (point A in The Measure Rule figure to the right) to the lowest valley in the pattern (B) then multiply it by the above 'percentage meeting price target.' Add the result to the breakout price (the highest peak in the pattern, A) to get the target, C. | |
| Big W | Look for a triple bottom with a tall left side, one with a steep decline and few or no price consolidations along the way. Expect price to return to near where the downtrend began. | |
| Confirmation | Wait for confirmation – price to close above the peak between the valleys (point A in the Measure Rule figure to the upper right). Triples are rare, so price often continues down without confirming the triple bottom. | |
| Rise | If the rise between the first two bottoms is higher than the rise between bottoms 2 and 3, draw a down-sloping trendline connecting the tops. When price crosses this trendline, buy. The Trendline figure to the right shows an example. | |
| Flat base | Expect a large rise if the triple bottom appears after a long, flat base. Use the weekly scale to find the flat base – the triple bottom will look like a pothole in a road. The Flat Base figure to the right shows an example. | |
| MMUs | Triple bottoms can appear as the corrective phase of a measured move up. The breakout move may be less than you expect. | |
| Up trend | Avoid triple bottoms that appear after an extensive up trend. The breakout is apt to result in a disappointing move. | |
| Declines | Triple bottoms with short- to intermediate-term (up to 6 months) decline leading to the pattern perform best post breakout. | |
| Peak | If a triple bottom appears after a peak, the post breakout rise is apt to stall at the peak. | |
| Shelf | A third bottom that appears flat tends to support prices. When price rises above the top of this shelf, buy. The Shelf figure to the right shows an example. | |
| Last valley | If the last valley bottom is above the second valley bottom, then expect better performance. The Shelf figure shows an example of this when bottom B is above bottom A. | |
| Throwbacks | Throwbacks hurt post breakout performance. |
The above figure shows an example of a triple bottom chart pattern. The three bottoms (1 , 2 and 3) are at nearly the same price. Although bottom 3 appears to be well above the other two, the price scale suggests they are close to each other. The green confirmation line shows where the three bottom chart pattern becomes a true triple bottom.
I present the information in slider format, so be sure to click the left or right arrows to view another slide.
Multi-peaks make me nervous. They are the basis of a bear trap. After trending upward, price moves sideways, forming a series of peaks and valleys, not moving higher or lower by much. Then a bullish pattern appears, often slightly below the prior valleys of the multi-peak. You might think it's bullish and price does rise. It can make it to the top of the tallest peak in the multi-peak pattern but then the stock tumbles. What was a promising bullish trade turns into a disaster when the trade fails.
This is an example of that situation. The triple bottom trade fails quickly after an upward breakout.
Here's a situation that had me fooled. Circled on the upper left, the stock gaps lower, suggesting something is wrong with the company. A bullish triple bottom appears. The stock gaps up and confirms the triple bottom with an upward breakout. Would I take the trade? No. I would expect the gap lower to prevail and more bad news to come. The stock did reach its measure rule target (red dot) and the ultimate high (green dot) is a bit higher. But then the stock reversed, sending price lower. Even though I avoided taking this trade, I think I made the right decision.
Avoid long uptrends. If your chart pattern (a triple bottom in this case) appears after a long uptrend (how long is 'long'? Unknown), I would avoid thinking the stock was going to rise much farther.
This chart is an example of an uptrend the started in June 2013 and peaked a year later. Then the triple bottom appeared and promptly failed. The stock did not rise far enough to reach the predicted target (that is, the height of the triple bottom added to the price of the top of the pattern gives a target).
Here's a stock that gives hints of failure. At A, we see the stock gap higher but then fade. At B, I saw the tall black candle and decided to avoid the trade. Often when you see these tall price bars that end the day near the start, either upward or downward, they are bearish or bullish, respectively. In this example, it's bearish and the downtrend follows what happened at A. The tall price bar at B is called a tail or spike.
Here's another example of a price spike or tail. I've circled it in red. Notice that the stock declined after its appearance (not long, mind you, less than 2 weeks). That made me want to avoid trading the triple bottom. The breakout was upward and the stock reached the ultimate high at the green dot before collapsing. The trade failed to meet its target.
This trade was easy to guess that it would fail. At A, on 7/20, the stock gapped lower. Gap B, is about three months later, 11/1. We can guess that the two events are earnings related. Fixing earnings can take more than a few days, so when the triple bottom (BBB) appeared, I expected the trade to fail. The stock dropped to 93 and change.
-- Thomas Bulkowski
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