descending triple bottom breakdown: P&F Price Objectives: Vertical Counts


Instead it plots price against changes in direction by plotting a column of Xs as the price rises and a column of Os as the price falls. For instance, positive future earnings outlook could create a new uptrend. A descending triple top breakdown is a series of three bottoms that are each lower than the previous bottom. The pattern is formed by two consecutive double bottom breakdowns. The idea is that supply is continuing to outstrip demand on an ongoing basis. Prices fall to a certain level and then reverse because the demand outstripped the supply at that level.

Technical analysts can use price patterns to help evaluate past and current market activity, and forecast future price action in order to make trading and investing decisions. Double bottoms are best identified visually, using relatively long-term charts . The lows do not have to be identical, but preferably between 3% to 4% of each other.

  • We also reference original research from other reputable publishers where appropriate.
  • While not often observed in everyday market trading, triple tops and bottoms provide compelling signal to technical traders for trend reversals.
  • The descending triangle is one of three triangle patterns used in technical analysis.
  • Tom Dorsey advocates applying the Extension to the high or low of the Count Column, which is the method used at

Commodity and historical index data provided by Pinnacle Data Corporation. The information provided by, Inc. is not investment advice. The horizontal count method can be applied to Triple Bottom Breakdowns, Descending Triple Bottom Breakdowns, Spread Triple Bottom Breakdowns, and Quadruple Bottom Breakdowns. Simply measure the width of the pattern, multiply by the box size and then by 2/3 the reversal amount. Cohen advocated 2/3, but some P&F chartists simply use the full reversal amount. Subtract this total from the pattern high for a price objective.

PnF Quadruple Top Breakout

We advise you to simply mark two bottoms on a chart, and if the price action breaks above the neckline after the second bottom – you should continue by trading the double bottom. The triple bottom chart pattern is a rare, but extremely effective reversal pattern. It’s rare since the successive creation of three equal lows doesn’t happen quite often. Therefore, the double bottom is a more frequent chart pattern as it requires one low less to happen.. As the name suggests, the triple bottom consists of the three consecutive lows printed at the same, or near the same level. For this chart pattern to occur and be effective the price action has to trade in a clear downtrend.

horizontal support

The rebound that follows is considered corrective within the overall downtrend, meaning the sellers are still in place, and they eventually make another try for the downside. Triangles are formed when both the supply and demand for the stock are drying up. Prices neither rise nor fall, resulting in an equilibrium between buying and selling.


Price patterns can appear on any charting period, from a fast 144-tick chart, to 60-minute, daily, weekly or annual charts. The significance of a pattern, however, is often directly related to its size and depth. In terms of profit targets, a conservative reading of the pattern suggests the minimum-move price target is equal to the distance of the two lows and the intermediate high. More aggressive targets are double the distance between the two lows and the intermediate high.

Securities will not always reach their targets, and some will even reverse course and trigger conflicting P&F signals before reaching their target. A P&F signal and a target are simply the starting point for analysis. Conditions change and chartists must regularly monitor the unfolding chart formation for evidence that would invalidate the original premise. It is also important to employ other technical analysis tools to confirm or refute a premise. For example, chartists can apply basic trend analysis on a bar chart or use bar chart-based indicators to confirm the findings on the P&F chart. Triple bottom patterns can look like other patterns as they develop.

In order for triple bottom patterns to form, a strong trend needs to be in place. The triple bottom typically forms in a long bearish downturn with plenty of price structure. After the three low points of a triple bottom have formed, anticipate a bullish reversal to break out to new price highs. To confirm the breakout higher, first identify the high point of the triple bottom pattern.

Since no pattern is perfect and analysis is often subjective, using descending triangles has limitations. A false breakdown may occur, or trend lines may need to be redrawn if the price action breaks out in the opposite direction. If a breakdown doesn’t occur, the stock could rebound to re-test the upper trend line resistance before making another move lower to re-test lower trend line support levels. The more often that the price touches the support and resistance levels, the more reliable the chart pattern. Establishing a Price Objective only covers the reward part of the risk-reward equation.

tops and bottoms

The chart above shows Computer Sciences with a Triple Bottom Breakdown to set the Count Column. Notice that this column became fixed at 14 columns when the stock rebounded back to 47 with a column of X’s. The length multiplied by the box size (.50) and reversal amount gives us the Extension . Subtracting this number from the high of the Count Column yields a downside Price Objective of 29. As noted in the alternatives below, Tom Dorsey advocates using 2/3 of the reversal amount for bearish Price Objectives, which yields a downside target of 36.

Long Tail Down Reversal

We will first examine the individual parts of the pattern and then look at an example. The triple bottom is similar to the double bottom chart pattern and may also look like descending or ascending triangles. Traders always look for confirmation of a triple bottom by applying other chart patterns or technical indicators. The triple bottom chart pattern typically follows a prolonged downtrend where bears are in control of the market. While the first bottom could simply be normal price movement, the second bottom is indicative of the bulls gaining momentum and preparing for a possible reversal.

Double bottoms may fail and become a triple bottom, and the triple bottom and the head and shoulders pattern can, by definition, be one and the same. The volume should drop throughout the pattern in a sign that bears are losing strength, while bullish volume should increase as the price breaks through the final resistance. The duration of the price pattern is an important consideration when interpreting a pattern and forecasting future price movement.

quadruple bottom breakdown

As with a triple top, it is generally assumed that the longer a particular trend takes to fully develop, the stronger the change in price once a breakdown occurs. The opposite of a triple bottom pattern, a triple top pattern is a bearish chart pattern that suggests a move to the downside. There is always some uncertainty when trading charting patterns as you are working with probability. As with most patterns, the triple bottom is easiest to recognize once the trading opportunity has passed.


A chart pattern is a graphical presentation of price movement by using a series of trend lines or curves. Chart patterns can be described as a natural phenomenon of fluctuations in the price of a… The support line forms horizontally while the resistance level forms the angle. Being able to draw support and resistance lines as well as trend lines are incredibly important.

Whether or not the security is displaying the Gravestone Doji Pattern. Whether or not the security is displaying the Falling Three Methods Pattern. Whether or not the security is displaying the Rising Three Methods Pattern. Whether or not the security is displaying the Evening Star Pattern. Whether or not the security is displaying the Bearish Harami Pattern. Whether or not the security is displaying the Bullish Harami Pattern.

The pattern comes to life after the confirmation

That said, descending triple bottom breakdowns where the last bottom is higher than the middle usually provide better results. The lows do not all have to exactly the same level but should be “close enough”. Our gain and loss percentage calculator quickly tells you the percentage of your account balance that you have won or lost. Find the approximate amount of currency units to buy or sell so you can control your maximum risk per position. Learn how to trade forex in a fun and easy-to-understand format.

Count Column Completion

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