Triple Top Pattern¶
OVERVIEW¶
A triple top is a bearish reversal chart pattern that forms when price rallies into the same resistance level three separate times and fails to close above it on each attempt. The pattern confirms only when price breaks below the neckline — the support level connecting the two pullback lows between the peaks.
Note
Until the neckline breaks, you have a range, not a triple top. The pattern is invalid without neckline confirmation.
IDENTIFICATION CRITERIA¶
Four structural elements must be present for a valid triple top.
| Element | Description |
|---|---|
| Three peaks | Highs within ~1–3% of each other (wider tolerance for small-caps or crypto) |
| Neckline | Horizontal support drawn through the two troughs between the peaks |
| Volume divergence | Lower volume on the second and third peaks than the first |
| Confirmation | Daily close below the neckline, ideally on expanding volume |
Measured-move price target formula:
WORKED EXAMPLE¶
Gold produced a textbook triple top from late 2017 into mid-2018.
| Data Point | Value |
|---|---|
| Resistance level (three peaks) | ~$1,360/oz |
| Neckline support | ~$1,300 |
| Pattern height | ~$60 |
| Breakdown point | $1,300 (May 2018) |
| Measured-move target | ~$1,240 |
| Actual low reached | ~$1,226/oz |
The same mechanics appear on individual equities such as XOM and SQ, where three swing highs form at a shared resistance level before a neckline break triggers the downtrend leg.
HOW TO USE¶
Entry
- Enter short or buy puts only after the neckline confirms on a daily close.
- Do not enter on the third peak touch alone — the pattern has not finished forming.
Stop placement
- Place stops just above the resistance line. A fourth higher high invalidates the pattern.
Profit target
- Use the measured-move level as the first profit-taking zone.
Defensive use
- Long holders watching a third test of the same ceiling should tighten stops or trim size ahead of confirmation.
Tip
Three failed breakout attempts at an identical price level is a warning sign in its own right, even before neckline confirmation occurs.
LIMITATIONS¶
Note
The triple top is descriptive, not predictive. It records that buyers failed three times — it does not explain why, and the measured move is a rule of thumb, not a guarantee.
| Limitation | Detail |
|---|---|
| Lower probability than double top | Resistance is heavily telegraphed by the third test, increasing false-break frequency |
| Stop-hunting risk | Algos may run the level before reversing, triggering premature entries |
| Requires peak separation | Three closes in the same week at the same price is consolidation, not a triple top |
| Fundamental overrides | Earnings, Fed decisions, or M&A can invalidate the setup instantly |