Identification: A triple top chart pattern is used as a technical indicator consisting of three consecutive peaks at approximately the same price level, with two minor pullbacks in between.
Occurrence: It is identified by price movements signifying a bearish reversal pattern forming after an extended uptrend. The three peaks create a resistance level that the price movement fails to break, indicating a lack of buying pressure. This failure to surpass the resistance level three times reinforces its significance and suggests a high probability of a downward reversal.
Study: When a Triple Top Pattern forms, it indicates a loss of buying momentum and the emergence of selling pressure. The first peak represents the exhaustion of bullish buying, resulting in a minor pullback. However, the subsequent rally fails to break the previous high, forming the second peak. This failure further reinforces the resistance level and attracts bearish traders. The price retraces, but the subsequent rally falls short of breaking the resistance level for the third time, forming the third peak. At this point, sellers overpower buyers, leading to a significant downward move, often resulting in a trend reversal.