The Hidden Strategy: Using the Simple Moving Average & Triple Bottom to Outsmart the Market

The Forgotten Strategy That Outsmarted the Pros

Imagine walking into a casino where the odds were stacked in your favor. No, this isn’t some Hollywood scam movie—it’s what happens when you truly understand how to combine the Simple Moving Average (SMA) and the Triple Bottom pattern. These two are like the Sherlock and Watson of technical analysis—often overlooked but deadly when used correctly.

While most traders are busy chasing the latest “super-indicator” or the flashiest AI-powered algo-trading bot, the real edge lies in understanding the old-school principles that still work. Today, I’m going to show you a unique and underground way to trade these two classic indicators together—without falling into the same traps that most traders do.

Let’s uncover this hidden gem.

What Most Traders Get Wrong About the Simple Moving Average

The Simple Moving Average (SMA) is like a good pair of jeans—reliable, versatile, and always in style. Yet, traders continuously misuse it like it’s a pair of neon parachute pants from the ‘90s. Here’s the deal:

• Most traders only use the SMA as a lagging indicator to confirm trends.
• They fail to recognize that different SMAs serve different purposes.
• Many get trapped in false signals because they don’t combine it with other patterns.

The SMA isn’t just a trend-following tool. When applied strategically, it helps you spot accumulation zones, detect smart money movements, and predict breakout levels before the herd catches on.

So, how do we avoid getting trapped in fakeouts and actually use the SMA like a pro? Enter the Triple Bottom pattern.

The Triple Bottom Pattern: The Market’s Secret Reversal Clue

If the Triple Bottom pattern were a character in a movie, it would be the underdog that no one believes in—until it makes a grand comeback. This pattern forms when the price bounces off a support level three times, indicating strong demand and a likely reversal.

Here’s why the Triple Bottom is one of the most powerful yet underrated reversal signals:

• It signals that sellers have tried and failed three times to break a key level.
• It often appears right before major uptrends, acting as a launchpad for strong bullish moves.
• When combined with the SMA, it creates an iron-clad confirmation signal.

The key is knowing when a Triple Bottom is real and when it’s just a market fakeout. That’s where hidden insider knowledge comes into play.

The Ultimate Ninja Tactic: Combining SMA & Triple Bottom for High-Precision Entries

So, how do we trade this like a hedge fund pro while avoiding rookie mistakes? Here’s the step-by-step blueprint:

1. Find the Triple Bottom Formation
   • Identify three price touches at the same support level on higher timeframes (H4, D1).
   • Make sure the volume declines on each downward push—this confirms that selling pressure is drying up.
2. Overlay the SMA (20, 50, or 200 depending on your strategy)
   • The 20-SMA is best for short-term momentum trades.
   • The 50-SMA is perfect for swing trades.
   • The 200-SMA works for long-term position trades.
3. Wait for the SMA to Act as a Support/Resistance Confirmation
   • If the price reclaims the 50-SMA after forming a Triple Bottom, bullish confirmation is in play.
   • If the price rejects the SMA, the pattern is likely a fakeout—stay away!
4. Enter the Trade with Precision
   • The best entry comes when the price breaks above the resistance neckline of the Triple Bottom while holding above the SMA.
   • Place stop-loss just below the last swing low for maximum risk control.
5. Exit Strategy for Maximum Profits
   • Target 1.5x – 2x the range of the Triple Bottom.
   • If the price starts stalling at the next major resistance, exit partially and trail the rest.

Real-World Example: How a Hedge Fund Nailed a 300-Pip Move Using This Setup

In late 2023, a major trading desk noticed EUR/USD forming a textbook Triple Bottom on the daily chart while reclaiming the 50-SMA. Instead of chasing breakouts like retail traders, they waited for the confirmation—a bullish engulfing candle above the neckline.

Their patience paid off. Over the next three weeks, EUR/USD surged over 300 pips as late traders scrambled to join the move.

The secret? Smart money always uses multiple confirmations.

Final Thoughts: Why This Strategy Works When Others Fail

The Forex market is full of noise, but real opportunities lie in strategies that combine multiple layers of confirmation. By using the Simple Moving Average (SMA) and the Triple Bottom together, you gain a massive edge over the average trader who’s just reacting to price action.

Key takeaways:

✅ The SMA is more than just a lagging indicator—it’s a hidden tool for smart entries.

✅ The Triple Bottom is a high-probability reversal signal when used correctly.

✅ Combining both indicators filters out false signals and improves trade accuracy.

✅ Hedge funds don’t just chase price—they wait for confirmation.

Now that you know how the pros use this, will you trade like the herd, or will you trade like a market insider?

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Image Credits: Cover image at the top is AI-generated