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Profitable
Patterns Number Four and Five
Triple and Double Bottoms and Tops: Reversals upon reversals
When you see a W or M pattern forming, you may have just
discovered a money-making double bottom or double top pattern. These patterns are common reversal patterns
used to suggest the current stock trend may be likely to shift.
But don’t panic if your double bottom or double top
patterns do not develop as you had originally thought. You
haven’t lost your chance for cash. If your W or M pattern
reverses for a fourth time, you could now be working with
the profitable triple bottom or triple top.
Double Bottom Pattern
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Double Bottom Pattern
A small peak is surrounded by two equal troughs. |
Purchase When:
• The price exceeds the middle-peak price.
Watch
For:
• A price increase of 10% to 20% from the first trough
to the middle peak.
• Two equal lows, not to differ by more than 3% or
4%.
Set Your Target Price:
For the double bottom pattern, sell your stock at a target
price of:
• Entry price plus the pattern’s height (distance
from the peak to the bottom of the lowest trough).
Double Top Pattern
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Double Top Pattern
A small trough is surrounded by two equal peaks. |
Short Sell When:
• The price drops below the middle-trough price.
Watch For:
• A price decrease of 10% to 20% from the first peak
to the middle trough.
• Two equal highs, not to differ by more than 3% or
4%.
Set Your Target Price:
For the double top pattern, buy shares at a target price
of:
• Entry price minus the pattern’s height (distance
from the trough to the top of the highest peak).
Triple Bottom Pattern
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Triple Bottom Pattern
Three equal troughs amid a series of peaks. |
Purchase When:
• The price exceeds the resistance established by
the prior peaks.
Watch For:
• A series of three identical troughs at the end
of a prolonged downtrend.
Set Your Target Price:
For triple bottom patterns, sell your stock at a target price
of:
• Entry price plus the pattern’s
height (distance from the resistance to the bottom of the
lowest trough).
Triple Top Pattern
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Triple Top Pattern
Three equal peaks amid a series of troughs. |
Purchase When:
• The price falls below the support that formed from
the prior troughs.
Watch For:
• A series of three peaks at relatively the same
level.
Set Your Target Price:
For triple top patterns, buy shares at a target price of:
• Entry price minus the pattern’s height (distance
from the support to the top of the highest peak).
Now You Know…
The five most profitable stock patterns:
• symmetrical triangle
• ascending and descending triangles
• head and shoulders
• double top and double bottom
• triple top and triple bottom
You’re halfway through your ChartAdvisor toolbox.
But you still need a couple more nuts and bolts to ensure
high-dollar profits in the market. Before you’re ready
to invest, you’ll want to learn how best to cut your
losses and maximize your returns.
Learn
How to Minimize Your Stock Market Losses >
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