Peaks in Low Places
Reversal trends like the triple bottom are very common in technical analysis. This method of evaluating the market is useful to individual and short term traders that are interested in buying and selling at the right time. Instead of considering public demand or available supply for a certain security, technical analysts examine only the way that the stock has behaved in the past. By considering the past performance, they are able to make educated predictions about how it will behave in the future..
If you’re not sure whether the trend you’ve been watching is a triple bottom or now, you should know that there are a few distinct features that you can look for. First, you’ll want to look for an overall downward trend in which prices have steadily decreased. Because it is a reversal pattern, the triple bottom must have three equally aggressive lows followed by an increase in price that breaks out above the resistance level. Although it is possible for the triple bottom pattern to form in just a few months’ time, it is more common for analysts to spot it forming over a period of many months. Because it can be too hard to see when you’re scrutinizing daily charts for minute changes, and because it can begin to incorrectly resemble other patterns while it is still forming, the weekly charts can be best suited for analysis of this pattern.