How to read the triple-top pattern? Technically, a triple-top pattern shows us that the price is unable to penetrate the area of the peaks. Translated into real-life events, it means that, after multiple attempts, the asset is unable to find many buyers in that price range.
As the price falls, it puts pressure on all those traders who bought during the pattern to start selling. If the price can't rise above resistance there is limited profit potential in holding onto it. As the price falls below the swing lows of the pattern, selling may escalate as former buyers exit losing long positions and new traders jump into short positions. This is the psychology of the pattern, and what helps fuel the selloff after the pattern completes.
How to trade the triple-top pattern? There are two ways to trade in this pattern - to work on a breakout or a bounce.
The first variant - we wait for the moment when the price touches a maximum (resistance level) for the third time. After that the quotes go down to the support level and, as a rule, if the triple top is formed, a breakout takes place.
This breakdown of support can be used as a signal to act. At this point, trades are opened to sell in the expectation that the downtrend will develop, at least on the range of the difference between support and resistance inside the pattern.
It is also possible to trade more conservatively - it is necessary to wait not only for the breakdown of support but also for the price to return to the broken level for its retest. If it is unsuccessful (which is supposed to be the case), a sell trade can be opened.