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Triple bottom is a trend reversal pattern, which is used by traders to generate buy signals. Triple bottom patterns occur rarely for most stocks and are considered as one of the most reliable indicators for buy signal. These are usually long-term trends and are thus noticed in weekly, biweekly or monthly charts.

Triple bottom pattern occurs at the end of a prolonged downtrend; and is an indicator of market reversal. It is characterized by three troughs in charts near a price level and is followed by a long upward trend, breaking the resistance level. The repeated lows and highs forms informs fairly clear support and resistance levels and buy signals are generated when the price breaks the resistance level after the third low. Height of the pattern, time taken for pattern formation and trading volume involved can give some idea about longevity of the bullish trend and price targets.

Once the stock enters the long bullish trend, the breakout point (original resistance level) becomes the potential support. Triple bottom formations help mainly long-term traders and investors, and less favor day traders and swing traders.

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