The profit obtained as a result of opening a position in the due time can be quite decent. To catch a wave of luck in time, experienced traders use trend reversal models that predict an early change of trend. One of such models is the triple bottom.
The triple bottom chart in Forex
The triple bottom model usually appears on the chart of the selected asset after a long downtrend and, after having correctly worked, it subsequently gives a signal for its turn. The pattern looks like three connected letters V.
According to AvaTrade reviews, for the search for a figure to be unmistakable, several features should be considered:
- The formation of the triple bottom is preceded by a rather long period (1–2 months). The longer the price decline, the more powerful will be its upward movement, so some traders recommend determining the figure on the daily chart of D1. Signals to enter the market will be much more reliable.
- In an ideal model, all three bases must be on the same support line, forming alternate minima. Maxima should also not strongly protrude beyond the upper limit, which is the line of resistance. However, in reality, the extremes are slightly shifted from the boundaries of the proposed corridor.
- The figure is considered complete when the uptrend breaks through the resistance level. This happens after the price has reached the lowest value three times.
Considering the triple Base model as an arena for the psychological struggle of bulls with bears, it can be noted that the latter has been stronger for a long time. After the trend encountered an obstacle in the form of a support line, trade volumes declined.