![]() This composition strengthens the validity of the pattern since it reflects a breathlessness of buyers. The magnitude of these three tops are normally the identical (as in the case below), but it may happen that the first top may be lower than the next two tops. An initial correction will then occur and, then the price will go back on resistance. The neckline pattern will be formed by the lowest of these two bearish peaks. This marks a reversal will.īelow the triple top shows the area of resistance that will lead to a correction of the price three times. Three bottoms will come in succession, reflecting an important resistance. The triple top is a bearish pattern with an MN shape. The more the upper band acted as resistance, the more the breakout will be violent. The breakout will often occur at the 4th point of contact. To avoid false breakouts, draw your trend lines based on high and low points of candlesticks and not their body. Also the movements towards the upper band are correction movements into a downward trend and as a result are less powerful. Actually the trend might continue along the lower band. It isn’t a good idea to take a long position at the contact with the lower band. Here is a graphical representation of a bearish channel: The movement can continue as far as the upper band is resistance. There is no theoretical target in this pattern. The bearish channel one of the most used chart patterns. The more contact points it has, the more the trend line is stronger and their breakout will give a stronger buy signal. To certify a line, there has to be at least two points of contact with the price. The bearish channel is arranged by two parallel lines that frame the downward price trend. ![]() A bearish channel is a continuation trend pattern.
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