Triple Bottom

The triple bottom is a high-probability bullish reversal pattern that forms when price tests the same support zone three times over 8-16 weeks before staging a sustained breakout. Unlike many reversal patterns, it carries quantifiable edge: Thomas Bulkowski’s Encyclopedia of Chart Patterns documents an ~87% breakout success rate on daily charts, outperforming the more common double bottom by roughly 9 percentage points. The pattern appears most frequently in large-cap equities and ETFs recovering from extended downtrends, and it is most reliable on daily and weekly timeframes.

How to Identify the Triple Bottom

1. Three lows at the same support level — Each trough should fall within 1-3% of the others. The lows do not need to be identical; a third low that is slightly higher than the first two is actually bullish, indicating sellers are weakening with each attempt.

2. Declining volume across the three troughs — The first bottom typically forms on the highest volume (panic selling or a news-driven flush). The second bottom sees moderate volume. The third bottom forms on the lightest volume of the three — the key diagnostic that selling pressure is exhausting. If the third low comes on volume higher than the second, treat the pattern with caution.

3. A defined neckline — The neckline is the horizontal resistance connecting the two interim peaks between the three bottoms. When the two peaks are at different heights, use the lower peak as the neckline. A breakout above this level triggers the trade.

4. Pattern duration of 8-16 weeks on the daily chart — Formations that complete in under 5 weeks on the daily chart are often noise. The extended time frame is what differentiates a triple bottom from a short-term consolidation and is what exhausts sellers completely.

5. Third low holds firm — Price approaches the support zone, stalls, and reverses without breaking to new lows. On the weekly chart, the third test often produces a long lower wick with a close well above the session low — a hammer candlestick confirming rejection.

Entry Rules

1. Wait for a confirmed daily close above the neckline — An intraday pierce of the neckline does not count. Require a full-session close above resistance. This single rule filters out a large percentage of false breakouts.

2. Confirm breakout volume at 1.5x the 20-day average — Bulkowski’s data shows that confirmed breakouts average 40-60% above the 20-day volume average, while false breakouts average only 10-20% above. A breakout on weak volume is a warning sign.

3. Alternative: pullback entry — After a confirmed breakout close, price frequently pulls back to retest the neckline as new support. Entering on the first green candle off this pullback typically produces a tighter stop and better risk-to-reward — often 2:1 or better compared to the 1:1 seen in the primary AAPL example below.

Exit Rules and Targets

1. Primary target: the measured move — Calculate the height from the triple-bottom support to the neckline, then add that distance to the breakout price.

2. Secondary target: prior resistance — The next structural resistance level above the measured target serves as a reasonable extension target if momentum remains strong after the measured move is hit.

3. Trailing stop — Once price reaches the measured move target, trail the stop to each successive swing low to capture additional upside without giving back all gains.

4. Neckline close as exit signal — If price closes back below the neckline after the breakout, exit the position. This pattern failure typically leads to a fast move lower.

Target Calculation: Identify the lowest point among the three troughs and the neckline price. Subtract the support low from the neckline to get the pattern height. Add that height to the neckline: (Neckline - Support Low) + Neckline = Target. Example: ($48 - $40) + $48 = $56.

Stop Loss Placement

Place the stop-loss 0.5-1% below the lowest of the three troughs. For a triple bottom with support at $40, a stop at $39.60-$39.80 is appropriate. This level is the hard invalidation point — a daily close below it means the pattern has failed and the prior downtrend is likely resuming. At a neckline of $48, this stop gives a $8-$8.40 risk against an $8 target on the measured move, producing roughly a 1:1 risk-to-reward ratio on the breakout entry. Using the pullback entry can push this to 2:1 or better, which is the preferred approach for traders requiring wider margin in their setups.

Practical Example

AAPL forms a triple bottom on the daily chart over 10 weeks. Bottom 1 prints at $168 on 1.8 million shares above average daily volume following an earnings miss — classic panic selling. Six weeks later, during a broader market dip, Bottom 2 forms at $169.50 on moderate volume. Four weeks after that, Bottom 3 touches $170 on the lightest volume of the three — sellers are exhausted and unable to push price below prior lows. The neckline sits at $182, defined by the two interim peaks.

Measured target: $182 + ($182 - $169) = $195.

Entry trigger: daily close above $182 with volume above 1.5x the 20-day average. Stop-loss at $167 (below all three troughs). On a $25,000 account with a 2% risk rule ($500 max loss), the position size at $15/share risk is 33 shares ($500 / $15). At the $195 target, the gain is $13/share x 33 shares = $429. This 1:1 R:R on the breakout entry is acceptable, but a pullback entry to $182-$183 after the initial breakout could cut the stop to $8/share and push the reward to $12/share — a 1.5:1 ratio on the same setup.

Best Timeframes for Triple Bottom

The daily chart is the primary timeframe for trading triple bottoms, with formations lasting 60-90 calendar days producing the most reliable signals. Weekly chart patterns, while rarer, carry even higher conviction when they appear. The 4-hour chart can offer useful context for timing the neckline breakout entry within a daily-chart setup, but the 4-hour chart alone should not be the basis for pattern identification — patterns on 15-minute and 1-hour charts in trending markets fail at materially higher rates due to noise. The ~87% success rate cited by Bulkowski applies specifically to daily chart formations; intraday success rates are not directly comparable and are generally lower.

Common Mistakes

1. Entering on an intraday pierce — The most frequent error. Price wicks above the neckline intraday and reverses, trapping breakout buyers. Require a daily close, not an intraday high.

2. Ignoring volume on the breakout — A neckline close on below-average volume has a much higher false-breakout rate. If the breakout bar shows volume only 10-15% above average, stand aside and wait for the next session.

3. Misidentifying the neckline when peaks are uneven — When the two interim highs are at different levels (for example, $180 and $182), use the lower of the two ($180) as the breakout trigger. Using the higher level delays entry but reduces false-trigger risk.

4. Abandoning the setup after a long formation — Traders often grow impatient after 10-12 weeks of watching a pattern develop and miss the breakout. The long formation is a feature, not a bug — it is what exhausts sellers and creates the high-probability reversal.

5. Placing the stop inside the pattern — Stops set at the midpoint of the formation or above the most recent low (rather than below all three troughs) are vulnerable to normal pattern fluctuation and get hit before the breakout occurs.

How to Journal Triple Bottom Trades

Journal Field	What to Record	Why It Matters
Pattern Type	Triple Bottom (Reversal)	Filter and compare reversal vs. continuation trade performance
Setup Quality	Rate 1-5 (volume signature, trough symmetry, neckline clarity)	Identify which setup grades produce the best outcomes
Volume at Each Trough	Relative volume for Bottom 1, 2, and 3 (e.g., 1.8x, 1.1x, 0.7x)	Validate the declining-volume diagnostic across your trades
Breakout Volume	Volume on breakout day vs. 20-day average (e.g., 1.7x)	Track correlation between breakout volume and follow-through
Entry Type	Breakout candle or neckline pullback	Determine which entry timing produces better R:R in your specific markets
Pattern Duration	Total days from Bottom 1 to breakout	Identify if longer or shorter formations produce stronger moves
Target Achieved	Yes / Partial / No	Measure actual measured-move hit rate against the 65% benchmark

Over 50 or more trades, these fields reveal whether your win rate on breakout entries differs from pullback entries, whether the three-declining-volume signature is truly predictive in the markets you trade, and how pattern duration correlates with move size. JournalPlus’s tagging system lets you filter all triple bottom trades instantly and compare them against your broader trade history — making it easy to validate whether this pattern produces edge in your specific instruments and timeframes.

For swing traders and breakout traders tracking multiple reversal setups, cross-referencing the triple bottom against the inverse head and shoulders and ascending triangle in JournalPlus shows which pattern earns the highest R multiple in your actual trading — not just in backtests.