TRIPLE BOTTOM: COEUR MINING #CDEThe Triple Bottom Pattern is a bullish reversal chart formation defined by three separate troughs occurring at approximately the same price point, succeeding an extended downtrend.
This pattern indicates a possible shift from bearish to bullish sentiment, generally suggesting a robust support level from which the asset's price could increase.
How to Recognize the Triple Bottom Pattern on a Chart:
Prior Downtrend: Prior to the emergence of the triple bottom, there must be a clear downtrend in the asset’s price. This establishes the framework for the reversal pattern.
Three Troughs: Identify three separate price troughs or lows. These troughs should be approximately at the same price level, with slight variations.
Volume Consideration: Typically, volume decreases during the formation of the troughs and rises during the price increase between them. A notable increase in volume during the breakout (when the price surpasses resistance) enhances the pattern’s credibility.
Separation Between Troughs: Each trough ought to be spaced apart by a duration of time with a moderate price increase in between. This price increase often halts at a similar resistance level, creating the apex of the pattern.
Breakout: The validation of the pattern occurs with a breakout above the resistance level established at the peaks between the troughs. The breakout indicates a potential reversal of the preceding downtrend.
Powerful Reversal Indicator: The Triple Bottom Pattern is highly regarded by traders as it signifies a robust shift in market sentiment. Following a prolonged downtrend, the formation of three successive troughs at approximately the same price point demonstrates a significant support level.
This support area is where buyers regularly step into the market or where the selling pressure begins to diminish. The mere occurrence of the price testing this level three times without breaking through indicates a decline in bearish momentum.
Duration: The pattern may develop over a span of several weeks to several months. Extended formations typically yield more substantial reversals.
Predictive Power: Once the Triple Bottom is validated—usually through a breakout above the resistance level—it can give traders a target price, presenting a quantifiable method for potential profit. By calculating the distance from the resistance level (established at the peaks between troughs) to the bottom of the pattern, and subsequently projecting that same distance upwards after the breakout, traders can establish price targets and modify their trading strategy as needed.
