Formation of "triple bottom"

The formation of "triple bottom" in technical analysis is recognized as a substitute for trend direction movement. It consists of 3 minimums and it indicates the change in the downward trend.

The formation of "triple bottom" is similar to its structure with the "dual bottom" figure; the difference is that it adds another minimum. The formation "triple bottom" is formed on the background of a strong downward trend. In case, if the market is not set up in the downward trend and we see a similar figure of "triple bottom", this means that the patent is similar to that figure but not the "triple bottom" pattern.

Pic 1. - The formation of a "triple bottom"

The basic elements of the "triple bottom" are

1. Formation of a "triple bottom" must be preceded by a strong downward trend.

2. Figure 3 must have three (minimum), which are at one level, but there is a slight margin between levels. These minimum ones create a level that does not let the price down.

3. Trade volume: As a rule, with the formation of "triple bottom" we see a reduced vertical volume. However, the formation of a third minimum may increase the vertical volume, indicating the strength of the current pattern.

4. The breakdown of the resistance level by the price indicates that the formation of the "triple bottom" has been completed.

5. At the last minute, we can see high clusters. 

Based on the entire above, one such question arises as for how to trade on this formation.

Pic 2. - The formation of a "triple bottom" trade

There are 3 options in this pattern of trade and all these options are correct.

1. We put in the position as soon as the first candle closes the line of resistance (the breakdown of the resistance level). In this case, we will have to put a bit of a big stop-loss, because it is quite logical that in the given case it will be correct if we put our stop order to raise our level of VAL back.

2. We are positioning the VAH level test. In this case, the stop-loss warrant is put back at the VAL level.

3. We are positioning the POC level test. Stop-loss is placed at the bottom of the scale. This is the best entry point since the price from this level is very fast and often goes great. It does have some explanation. 

The point is that the form of "triple bottom" is nothing more than a sort of flute. Because we have a strong downward trend in the number of traders in most short positions. An additional stock is included in the major players. When other big players manage to accumulate a buy position and take the price above, the majority of small traders are exposed to the market stop-loss Orders. The losing position remains only to the big players because they do not use stop-loss orders to protect their capital from market risks, there are other tools to do so.

The disadvantage of being a big player is in the losing position and wait for the correction, as soon as the price goes to the POC level can come out from that position. As we all know, this is a position out of nothing, or not to buy an asset, which means that the market will be great buying warrants or orders which will quickly move the price upwards.