I've noticed that many crypto traders ignore one of the most reliable patterns in technical analysis — the triple top and triple bottom. These formations are rare, but when they develop, they provide a strong signal of a trend reversal.

Let's understand what they actually are. A triple top is a bearish formation that appears after an uptrend. The market tries three times to move higher but each time encounters resistance at roughly the same level. It looks like the letter M. After the third failed attempt, the price usually breaks down, leading to a correction.

The opposite is the triple bottom. This is a bullish formation that forms at the end of a decline. The market tries three times to break new lows but each time pulls back. All three bottoms are roughly at the same price level. Then, when sellers tire out, the price aggressively moves above resistance, and a new bullish trend begins.

The main value of these patterns is that they help identify entry and exit points. When I see a forming triple top in trading, I know to prepare for a correction. If I am in a long position, it’s a signal to take profits or move the stop-loss higher. For bears, it’s an opportunity to open a short.

But there’s a nuance — you need confirmation. Don’t open a position just because you see three touches of a level. Confirmation only occurs when the price breaks through the resistance (for the triple bottom) or the support (for the triple top). Without this breakout, the pattern is not considered formed.

Real-world examples. On the daily Bitcoin chart in 2021, a classic triple bottom was visible. The first low was around $29,800, the second around $28,726, and the third around $29,258. All three bottoms were in a narrow range. After the third touch, the price aggressively rose above the $42,444 mark, which was the high between the bottom and the subsequent rally. This was a textbook signal to go long.

How to trade these patterns correctly? First, identify the three extremes (three tops or three bottoms). Then find the highest point between the first and third extremes (this is the resistance level for the triple bottom or support for the triple top). When the price breaks this level, it’s a signal to enter.

To manage risk, place a stop-loss below the lowest bottom in the pattern (if you’re going long) or above the highest top (if you’re going short). The target level is usually calculated as the distance from the bottom to the top of the pattern, then projected upward from the breakout point.

One warning — these patterns work best on large cryptocurrencies with good liquidity, like Bitcoin and Ethereum. On smaller altcoins, manipulation can occur, and the breakout may not happen. Volume during the breakout is also important — if the breakout occurs on increasing volume, the success probability is higher.

Another point — don’t enter prematurely. I’ve seen beginners open a position after noticing three touches of a level but before breakout confirmation. That’s a sure way to incur losses. Wait for the candle to close above resistance (for a long) or below support (for a short), and only then enter.

Overall, the triple top and triple bottom are tools worth having in your arsenal. They are rare, so spotting them increases the likelihood of a successful trade. But remember — no pattern works 100 percent. Always use a stop-loss, manage your position size, and never risk more than you can afford to lose.