What is a Triple Top?

A Triple Top is a chart pattern that can help you to get out or short a stock when it is at its top. It occurs when a give stock has tried and failed to break through resistance 3 times. Then the stock actually breaks support. In a Triple Top we would expect the stock to keep heading down.

Let us look at an example. This stock started out in an uptrend. Then it started staying between $10 and $17. It hit $17 three times each time it did it came down to its support. Finally after its third failed attempt at breaking resistance it comes down and breaks through resistance. This gives us a strong sell signal.

Now that we know what a Triple Top is we can look at how to trade a Triple Top. When we see a Triple Top BREAK SUPPORT it gives us a signal that the stock will most likely go down. We can either use this signal to get out of our long positions or to get into our short positions, or both. A good trader would have shorted this stock once it broke out and followed it down by setting stops.

Remember to develop your own system. Also never use more then 2-5% of your account in any 1 trade.

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