Triple Bottoms

Core idea

A triple bottom is a bullish reversal made of three distinct, well-separated lows that bottom at roughly the same price after a downtrend. The pattern is confirmed — and only confirmed — when price closes above the highest peak between the three troughs (the confirmation line). Until that close, the three lows are just three lows; the pattern does not exist as a tradeable setup.

Bulkowski catalogued 3,105 triple bottoms across 787 stocks. Performance ranks closer to the top of the list than the bottom for upward breakouts, but failure rates are mid-list (16th of bullish patterns in bull markets, 10th in bear). Volume slopes down across the formation most of the time, throwbacks occur about two-thirds of the time, and price reaches the measure-rule target between 55% and 74% of breakouts.

Bulkowski's framing: Triple bottoms are the bullish mirror image of head-and-shoulders bottoms — except the middle low must be at or slightly above the other two. If the middle dips below, you are probably looking at a head-and-shoulders, not a triple bottom.

Why it matters

Three failed attempts by sellers to push price below a level is one of the cleanest visual statements of demand absorbing supply. Each rejection at roughly the same low is a fresh data point that buyers are stepping in there. By the time the pattern confirms with a close above the highest intermediate peak, the chart has shown three independent tests of support and one decisive rejection of the resistance ceiling.

Why the middle bottom matters

The geometry of the three lows is the single most useful filter for distinguishing a triple bottom from look-alikes. A lower middle low is the signature of a head-and-shoulders bottom. Successively higher lows make it a three-rising-valleys pattern. Successively lower lows turn it into a broadening formation. Only when the three lows sit at about the same price — with the middle one equal or slightly higher — do you have a true triple bottom.

Why confirmation is non-negotiable

The "5% failure" category for triple bottoms exists precisely because traders act before confirmation. Roughly 13% of bull-market triple bottoms fail to rise more than 5% after the confirmation close. Take that close away and the failure rate climbs steeply — most "failed triple bottoms" are actually unconfirmed triple bottoms that the trader bought too early.

Key takeaways

Mental model

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Practical application

Example

A mid-cap software stock declines from $48 to $32 over three months on guidance disappointment. The stock bottoms at $32.10, rallies to $36.50 over four weeks, then sells off to a second low at $32.30 over the next three weeks. A second rally takes it to $36.20, followed by a six-week drift back down to a third low at $32.05. The three lows sit within 25 cents of each other; the middle low is the highest of the three.

The confirmation line is the higher of the two intermediate peaks: $36.50. The trader marks a buy-stop at $36.65 (just above) and waits. Three weeks after the third low, the stock closes at $37.20 on volume 2.4x its 50-day average — the confirmation breakout. The buy-stop fills at $36.65 and the trader places a stop at $33.80, below the most recent minor pullback in the rally to the breakout.

Eight trading days later, the stock pulls back to $36.80 — a textbook throwback grazing but not breaching the breakout level. The trader holds. Volume contracts on the throwback and expands on the bounce. Twelve weeks later the stock trades at $41.50 — a 13% gain on a measure-rule target of $40.95 ($36.50 + ($36.50 − $32.10)). The pattern reached and slightly exceeded its target, which Bulkowski's data says happens roughly 55-74% of the time.

The discipline that paid off was waiting for the confirmation close, then sizing the stop to the most recent swing low rather than the pattern low. A stop below $32.05 would have given the pattern a 13% drawdown tolerance — almost the entire expected gain — and turned a winner into break-even risk-adjusted.

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