Three touches of the vertex: Why this pattern works in crypto trading

In the arsenal of technical analysis for cryptocurrencies, there are rare but extremely powerful configurations that serve as key indicators of a market trend reversal. Among them, two complementary structures occupy a special place: the triple top trading pattern and its mirror image — the triple bottom. Although perfect, textbook forms of these schemes are infrequent, it is precisely their rarity that makes them exceptionally valuable for market participants.

Market Psychology Behind the Triple Top

The triple top trading pattern is a bearish reversal structure that occurs during a weakening upward trend. The essence of the formation is that the market attempts three times to break through the same resistance level, but each attempt fails.

The formation process looks as follows: after a long rise, buyers exhaust their energy. Sellers begin an assault, but lack the strength to establish a sustained downtrend. An intense struggle ensues between bulls and bears — the price rises, then falls, then rises again. Three unsuccessful attempts to break higher create a characteristic “M” shape. Eventually, the bears win, and the price heads downward, breaking the support line.

Anatomy of the Triple Bottom: The Start of an Upward Cycle

The opposite dynamic is demonstrated by the triple bottom. This bullish reversal configuration occurs at the end of a downtrend and signals the beginning of an upward movement.

The formation occurs as follows: the market experiences a correction, but sellers cannot reach new lows. Each attempt to break support fails near the same level. Three such failures create a pattern in the shape of a “W”. Sellers ultimately lose control, and buyers start an aggressive ascent, breaking resistance upward.

How to Distinguish Three Touches of the Top from Other Reversal Structures

Reversal configurations in technical analysis always consist of three consecutive components:

1. Initial trend (rise or fall)
2. The actual reversal structure
3. Confirmation of a breakout in the new direction

The triple top trading pattern differs from the similar “head and shoulders” scheme in the placement of the central peak — in the triple top, all three peaks are approximately at the same level, whereas in the “head and shoulders,” the middle peak is higher than the lateral ones.

If the formation does not find confirmation (the price does not break above or below the key level), then it may be a trend continuation pattern rather than a reversal. Examples of such consolidating structures include flags, pennants, and triangles.

Practical Example on a 15-Minute Bitcoin Chart

On shorter timeframes, patterns appear more frequently. Let’s consider a specific case: BTC jumped by 9% in a few minutes — from 42,100 to 45,876 dollars, forming the beginning of a triple top trading pattern.

The first failure occurred at the 45,800-dollar level (drop to 42,130), the second — again around 45,694 dollars (pullback to 44,628), the third — at 45,876 dollars. All three highs differed by less than 0.4%, confirming the classic formation. A subsequent drop below the support level would confirm the pattern.

Long-term Scenario: The Triple Bottom on the Bitcoin Daily Chart

Let’s examine a contrasting example from BTC history during April-July 2021. On April 14, a major correction began, finding initial support at 29,800 dollars. Then, a rise to 42,444 dollars followed, after which a pullback to 28,726 occurred — the second attempt to test the bottom. The third attempt stalled at 29,258 dollars.

From this third low, Bitcoin aggressively reversed upward, subsequently confidently surpassing the 42,444-dollar level and continuing its ascent. This was a classic example of a confirmed triple bottom.

Level Setting Techniques: How to Set Stop-Loss and Take-Profit

For the triple bottom:

The highest point is determined by drawing two vertical lines at the first and third bottoms. The maximum between these lines is the upper boundary of the formation. A sustained breakout above this level confirms the pattern.

The stop-loss is conservatively placed at the lowest point of the bottom. The target level is calculated using the formula: add the height of the formation (the difference between the minimum and maximum) to the breakout price.

Example with Ethereum in summer 2021: three bottoms at levels 1728, 1697, and 1716 dollars (difference less than 2%), formation maximum — 2912 dollars. The pattern height: 2912 − 1697 = 1215 dollars. The target level: 2912 + 1215 = 4127 dollars.

For the triple top:

The lowest point is determined similarly — draw vertical lines at the first and third peaks, find the minimum between them. A breakout below this level confirms a bearish reversal.

Risks and Limitations When Using Patterns

The main limitation is the impatience of beginners entering a position BEFORE the pattern is confirmed. When only two failures are visible, the pattern is not yet ready, and early entry may lead to losses.

Volume is a decisive factor. A breakout on low volume often turns out to be false, whereas a breakout on rising volume is more reliable. For small altcoins with low liquidity, breakouts may not occur at all due to insufficient market depth.

The pattern validation has been tested on major assets (Bitcoin, Ethereum), but is less predictable on microcaps. Using a stop-loss below the formation’s minimum remains a critical risk management rule.

Summary: From Theory to Practice

The triple top trading pattern and the triple bottom are time-tested schemes for identifying reversals in cryptocurrency charts. Their rarity guarantees reliability, but confirmation remains a mandatory condition. Wait for a key level breakout, verify volume, and set a protective stop-loss — this is the minimum set of rules for safe trading with these patterns.