Bulkowski’s Triple Bottoms

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Triple bottoms are somewhat rare chart patterns. That makes sense because three peaks seldom line up like soldiers at attention. They have a low break even failure rate and decent average rise in a bull market, giving them a solid performance rank. For more information see pages 765 to 778 of the book Encyclopedia of Chart Patterns, Second Edition and the following...

Important Results

Identification Guidelines

Trading Tips

Example

Triple bottom chart pattern

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Important Bull Market Results

Overall performance rank (1 is best): 7 out of 23

Break even failure rate: 4%

Average rise: 37%

Throwback rate: 64%

Percentage meeting price target: 64%

Identification Guidelines

Characteristic	Discussion
Price trend	Downward leading to the pattern but should not drop below the first bottom.
Shape	Three distinct valleys that look similar.
Bottom price	The price variation between bottoms is small such that it appears the three valleys bottom near the same price. Allow variations.
Confirmation	The pattern confirms as a true triple bottom once price closes above the highest peak between the valleys.
Volume	Usually higher on the first bottom than on the last, trending downward 67% of the time, but it may peak beneath each valley.

Trading Tips

Trading Tactic	Explanation
Measure rule	Compute the height from the highest peak (point A in The Measure Rule figure to the right) to the lowest valley in the pattern (B) then multiply it by the above “percentage meeting price target.” Add the result to the breakout price (the highest peak in the pattern, A) to get the target, C.
Big W	Look for a triple bottom with a tall left side, one with a steep decline and few or no price consolidations along the way. Expect price to return to near where the downtrend began.
Confirmation	Wait for confirmation – price to close above the peak between the valleys (point A in the Measure Rule figure to the upper right). Triples are rare, so price often continues down without confirming the triple bottom.
Rise	If the rise between the first two bottoms is higher than the rise between bottoms 2 and 3, draw a down-sloping trendline connecting the tops. When price crosses this trendline, buy. The Trendline figure to the right shows an example.
Flat base	Expect a large rise if the triple bottom appears after a long, flat base. Use the weekly scale to find the flat base – the triple bottom will look like a pothole in a road. The Flat Base figure to the right shows an example.
MMUs	Triple bottoms can appear as the corrective phase of a measured move up. The breakout move may be less than you expect.
Up trend	Avoid triple bottoms that appear after an extensive up trend. The breakout is apt to result in a disappointing move.
Declines	Triple bottoms with short-term (less than 3 months) decline leading to the pattern perform best postbreakout.
Peak	If a triple bottom appears after a peak, the postbreakout rise is apt to stall at the peak.
Shelf	A third bottom that appears flat tends to support prices. When price rises above the top of this shelf, buy. The Shelf figure to the right shows an example.
Last valley	If the last valley bottom is above the second valley bottom, then expect better performance. The Shelf figure shows an example of this when bottom B is above bottom A.
Throwbacks	Throwbacks hurt postbreakout performance.

The Measure Rule

Trendline

Flat Base

Shelf

Example

Triple bottom chart pattern example

The above figure shows an example of a triple bottom chart pattern. The three bottoms (1 , 2 and 3) are at nearly the same price. Although bottom 3 appears to be well above the other two, the price scale suggests they are close to each other. The green confirmation line shows where the three bottom chart pattern becomes a true triple bottom.