Definition
Three falling peaks is a bearish chart pattern made up of three distinct price peaks, each one lower than the one before it. The descending sequence of highs traces out the classic structure of a downtrend: every rally fails sooner and at a lower level than the last.
The pattern is a visual confirmation that sellers are steadily gaining control. Each lower peak shows that buyers are willing to pay less and less, while sellers are willing to act earlier. It is often read as a sign that a decline is set to continue.
Why it matters
How it works
The three peaks should be reasonably well-separated and clearly defined, with each high noticeably below the previous one. Connecting the peaks produces a downward-sloping trendline that acts as resistance for any future rally attempts.
The decline is confirmed when price breaks below the support level formed by the lows between the peaks. Volume that expands on the down moves and contracts on the rallies strengthens the bearish reading. Until support breaks, the pattern describes the existing trend rather than predicting an acceleration.