# What Is a Triple Bottom Chart in Technical Analysis?

![A investor places an order with their broker after spotting a stock that is breaking out above resistance. ](https://www.investopedia.com/thmb/ptmBN_Qigofr5XYQRd0E3LkAkUw=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/WhatIsaTripleBottomChartinTechnicalAnalysisGettyImages-2032290140-fcfd84140e124f079cfc405a1e555b51.jpg)

*— Nanostockk / Getty Images*

## What Is a Triple Bottom?

The triple bottom is a bullish [chart pattern](https://www.investopedia.com/terms/p/pattern.asp) in technical analysis, marked by three equal lows followed by a [breakout](https://www.investopedia.com/terms/b/breakout.asp) past resistance. This pattern indicates a potential market reversal, signaling a shift in control from sellers to buyers.

### Key Takeaways

*   A triple bottom chart pattern is a bullish reversal indicator characterized by three equal lows followed by a breakout above resistance.  
    
*   The pattern typically forms after a prolonged downtrend, signaling a transition of control from sellers to buyers.  
    
*   To confirm a triple bottom, traders look for decreasing volume during lows and increasing volume upon a breakout.  
    
*   The triple bottom is considered a strong buying signal, as it suggests an upward price movement after the breakout.  
    
*   While similar to a double bottom, the triple bottom provides a more confirmed reversal but comes with its own risks and limitations.

## How Does a Triple Bottom Pattern Work?

A triple bottom often occurs after a long downtrend when sellers control the market. While the first bottom could simply be normal price movement, the second bottom is indicative of the bulls gaining momentum and preparing for a possible [reversal](https://www.investopedia.com/terms/r/reversal.asp). The third bottom indicates that there's strong support in place and bears may [capitulate](https://www.investopedia.com/terms/c/capitulation.asp) when the price breaks through [resistance levels](https://www.investopedia.com/terms/r/resistance.asp).

There are a few rules that are commonly used to qualify triple bottoms:

1.  There should be an existing [downtrend](https://www.investopedia.com/terms/d/downtrend.asp) in place before the pattern occurs.
2.  The three lows should be roughly equal in price and spaced out from each other. While the price doesn't have to be exactly equal, it should be reasonably close to the same price, such that a [trendline](https://www.investopedia.com/terms/t/trendline.asp) is horizontal.
3.  The [volume](https://www.investopedia.com/terms/v/volume.asp) should drop throughout the pattern in a sign that bears are losing strength, while bullish volume should increase as the price breaks through the final resistance.

## Strategies for Trading a Triple Bottom

The price target for a double bottom reversal is typically the distance between the lows and the breakout point added to the breakout point. For example, if the low is $10.00 and the breakout is at $12.00, the price target would be (12 - 10 = 2 + 12 = 14) $14.00. [Stop-loss](https://www.investopedia.com/terms/s/stop-lossorder.asp) points are usually placed just below the breakout point and/or below the triple bottom lows.

The triple bottom is similar to the [double bottom](https://www.investopedia.com/terms/d/doublebottom.asp) chart pattern and may also look like [ascending](https://www.investopedia.com/terms/a/ascendingtriangle.asp) or [descending triangles](https://www.investopedia.com/terms/d/descendingtriangle.asp). Traders confirm a triple bottom with other technical indicators or chart patterns. Traders might notice an oversold [relative strength index](https://www.investopedia.com/terms/r/rsi.asp) (RSI) before a double bottom forms and look for a breakout to confirm if it's a triple bottom instead of a descending triangle.

## Real-World Example of a Triple Bottom Pattern

The following chart shows an example of a triple bottom chart pattern.

![Image](https://www.investopedia.com/thmb/qPDizMlxuc3JO3yhY4mP94-IirU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/dotdash_Final_Triple_Bottom_Definition_Jun_2020-01-38534512050d4a0a8e7cefc9ebb3509f.jpg)

**

In this example, Momenta Pharmaceuticals' stock formed a triple bottom and broke out from trend line resistance. The difference between the third bottom and the breakout point was about $1.75, which translated to a [take-profit](https://www.investopedia.com/terms/t/take-profitorder.asp) point of around $15.50 on the upside. The stop-loss point could have been placed at around $13.50 to limit [downside risk](https://www.investopedia.com/terms/d/downsiderisk.asp) as well.

## Comparing Triple Bottoms and Triple Tops

The triple top is the opposite pattern of a triple bottom. Instead of a bullish reversal, a triple top is a bearish reversal pattern where price action bumps off resistance three times, posting three roughly equal highs before plummeting down through resistance.

That said, these are essentially mirror patterns of the same market phenomenon—a prolonged battle for control between the bears and bulls where one side emerges victorious. If no winner emerges, a triple bottom or top will simply become a longer term [range](https://www.investopedia.com/terms/r/range.asp).

## Challenges and Limitations of Trading a Triple Bottom

There is always some uncertainty when trading charting patterns as you are working with probability. As with most patterns, the triple bottom is easiest to recognize once the trading opportunity has passed. Double bottoms may fail and become a triple bottom, and the triple bottom and the [head and shoulders pattern](https://www.investopedia.com/terms/h/head-shoulders.asp) can, by definition, be one and the same.

The main limitation of a triple bottom is the poor risk-reward tradeoff due to target and stop-loss placement. To increase profit potential, traders might place their stop loss within the pattern and adjust it as the breakout happens. The issue with this is the likelihood of being stopped out in the range for a small loss is higher.

## Is a Triple Bottom Bullish or Bearish?

A triple bottom pattern is a bullish chart reversal pattern that suggests a breakout to the upside.

## What Happens After a Triple Bottom?

After the third relatively equal low is spotted, traders can anticipate the trend will move to the upside, break resistence levels, and reach higher prices.

## Is a Triple Top Pattern a Good Sign?

The opposite of a triple bottom pattern, a triple top pattern is a bearish chart pattern that suggests a move to the downside.

## The Bottom Line

A triple bottom chart pattern represents a bullish reversal signal, typically forming after a prolonged downtrend and manifested through three roughly equal lows with a subsequent breakout above resistance. Traders utilize this pattern to enter bullish positions, anticipating upward momentum. Understanding the dynamics of buyer and seller interactions at resistance and support levels is crucial.

However, the triple bottom, like other chart patterns, should be used with caution as trading involves probabilities. Moreover, traders are advised to seek confirmation from additional technical indicators to validate the occurrence. Always consider the risk-reward ratio, as the placement of targets and stop-loss points can impact profitability.