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Triple Bottom Pattern Analysis

Triple Bottom Pattern : The triple bottom reversal pattern has three equal lows. They will indicate an opportunity to take a bullish position. Before triple bottom occurs the bears are in control of the market forming a prolonged downtrend. The first bottom will not indicate anything out of the ordinary. Then second and third bottoms show a change in direction where buyers may push the price action high after the price breaks through the resistance. The pattern is the same as a triple top pattern with equal size. They should have sufficient space between them. The clear indication drop in volume leads to the pattern as increase in volume on the advance. The price should break the resistance level which is at the highest point of the highs present between the bottoms. The price target is calculated as a value from the resistance breaks to the base points plus the resistance break.

Trading with Triple Bottom : Triple Bottom is a bullish reversal pattern that illustrates a particular asset is trading in a downtrend and found a support level. When the downtrend hits the third low it results in an uptrend followed by pressure on the trader to sell the security. The price will return to the previous low so buyers will begin to move back into the asset results in the price experiencing an uptrend. If the situation above is repeated for the third time and the price falls to a new low, then the pattern is said to be complete once it attains a higher position than the resistance level. Traders purchase the underlying security and benefiting from the downtrend. When the pattern ends it will experience a price high which will result in more selling pressure among the traders. So selling the security at this point will allow short-term traders to profit.

How to use triple bottom pattern in binary options trading?

The triple bottom pattern happens during sideway consolidation but it doesn’t mean bullish reversal. The binary options traders make a sustainable downtrend which is noticed before triple bottom formation. The important factor is to keep an eye on the resistance trendline. In ascending the pattern would be doubtful of bullish counter-trend action. So the horizontal line is affordable but the scenario is resistance that doesn’t reflect the previous downtrend and head.

Price support : Here the three troughs are created at around the same price level. The second trough tends to show that buyers are beginning to gain control as an area of price support becomes more established. Once the price fails to break through the same trough level on a third-occasion and bounces up as there is firmer evidence in place of strong price support at this level.

Breakout : A sharp upward price movement takes place once the price breaks through the upper resistance level of the formation. The horizontal line can be drawn through the point of the three troughs represents the area of price support. Another line can be drawn across the top of the formation using the high price point created by the price bounce within the triple-bottom pattern.

Attributes

Pattern type :The pattern is Reversal

The indication :The pattern is Bullish

Breakout confirmation :The confirmation for this pattern is a close above the upper trend line with above-average volume.

Measuring : Then the distance between the first high and low of head and then add it to upper resistance level on the breakout.

Volume : The volume tends to be low, heading into the formation and increase on the breakout.

Conclusion

The pattern is reliable for the technical traders and allows finding reversal within the trend line. They will calculate the trend that will go it is established. The traders are considered by the pattern as a neutral pattern until the breakout is confirmed. The upper resistance level is broken with a sharp increase in volume momentum that carries the price action higher.