Trading the Triple Top Pattern
All in all, we take a note of the three mandatory elements of the triple top pattern - an uptrend, three failures, and a break of the neckline that activated the pattern and opened the door for us to get into the market.
As with every other candlestick pattern, there are two options for an entry:
after the breakout candle closes below the neckline
waiting for a retest of the broken neckline.
In this particular example, both options are eventually on the table. For whichever of these two you would have chosen, your entry would have been the same. The stop-loss order is placed above the neckline, allowing some space for a potential retest of the neckline from a downside.
The vertical blue measures the distance between the neckline and the horizontal resistance. A simple copy-paste from the point of a breakout gives you a measured take-profit level, which if hit, marks the completion of the triple top pattern.
As you can see from the chart, the price action first came close to hitting the take profit, but reversed and returned higher for a retest of the neckline. Finally, our profit-taking level has been hit, booking us more than 280 pips. On the other hand, we risked just 30 pips, hence making this setup a perfect trade from the risk-reward perspective.
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