Position Trading and the Triple Top: The Hidden Formula for Spotting Market Peaks

Why Most Traders Miss the Triple Top Reversal (And How You Can Spot It Weeks in Advance)

Picture this: You’re holding onto a position trade, expecting a bullish run to continue, only to watch the price hit resistance, turn around, try again—fail—and then one last time, before tanking like a reality show contestant who thought they were the fan favorite. Welcome to the triple top pattern, a clear warning sign that the market is about to turn, yet one that many traders overlook.

Position trading, which involves holding trades for weeks or even months, thrives on big-picture thinking. But if you don’t recognize key reversal patterns like the triple top, your hard-earned gains can evaporate faster than a poorly placed stop-loss in a volatile market.

Let’s break down how to spot, trade, and profit from the triple top before the market rug-pulls unsuspecting traders.

What is a Triple Top? (And Why It’s a Position Trader’s Best Friend)

A triple top is a classic reversal pattern that signals the exhaustion of an uptrend. It consists of three failed attempts to break through a key resistance level, followed by a significant price drop. Think of it like trying to kick down a reinforced door three times—if it doesn’t budge, you’re not getting through.

The Three Stages of a Triple Top:

1. The First Peak: The price reaches a resistance level and retraces, giving traders a potential signal of rejection.
2. The Second Peak: Buyers try again, often with less momentum, hinting at market hesitation.
3. The Third Peak: The final attempt fails, followed by a price drop that confirms the market has run out of steam.

Once the price breaks below the neckline (support level), the downtrend begins, trapping late buyers who believed the resistance would eventually break.

Why Position Traders Should Care About the Triple Top

Unlike scalpers and day traders, position traders hold trades for weeks or months, meaning they must catch major trends while avoiding false breakouts. A confirmed triple top is a strong indication that a bullish trend is about to collapse, making it a prime shorting opportunity.

Key Benefits of Trading Triple Tops in Position Trading:

✅ High Probability Setup – Triple tops rarely fail when correctly identified.

✅ Massive Risk-Reward Potential – Since you’re riding a major downtrend, the profit margins can be substantial.

✅ Clear Entry & Exit Rules – The pattern provides well-defined stop-loss and take-profit zones.

How to Spot a Triple Top Before the Crowd

1. Look for Strong Uptrends

Triple tops don’t form in just any market condition. They appear after a prolonged uptrend, when traders are overly optimistic.

2. Identify Three Failed Attempts at Resistance

Use weekly and daily charts to verify that the price has hit resistance three times without breaking through.

3. Confirm with Volume Analysis

Each failed attempt should come with declining volume, showing that buyers are losing steam.

4. Wait for the Neckline Break

The neckline is the support level connecting the lows between the peaks. A break below this level confirms the pattern and signals a short entry.

Triple Top Trading Strategy for Position Traders

Step 1: Identify the Pattern on a Higher Timeframe
Check the daily and weekly charts for a clear triple top formation near a significant resistance level.

Step 2: Wait for a Close Below the Neckline
Patience is key. Enter only when the price closes below the neckline to avoid false breakouts.

Step 3: Set a Stop-Loss Above the Third Peak
Protect your trade by setting a stop-loss just above the third peak to minimize risk.

Step 4: Target Major Support Levels
Your take-profit should be at previous strong support zones or based on the measured move rule (the height of the pattern projected downward).

Real-World Example: Triple Top in EUR/USD (2023 Case Study)

In late 2023, EUR/USD formed a textbook triple top around 1.1200. Each peak showed decreasing volume, and after failing for the third time, the price broke below the 1.0950 neckline. Traders who shorted on the breakdown saw over 350 pips in profit within weeks.

Final Thoughts: Mastering the Triple Top in Position Trading

Most traders ignore reversal signals, hoping the market will ‘just push through.’ But recognizing a triple top early can turn your position trading from average to elite.

Key Takeaways:

✔ A triple top signals the end of an uptrend and offers a high-probability shorting opportunity.

✔ Position traders benefit by catching major trend reversals before they happen.

✔ Volume confirmation and neckline breaks are essential for avoiding false signals.

✔ Trading triple tops can provide massive risk-reward advantages when executed properly.

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