Chart Pattern Analysis
figUre 13.19 An Ideal Triple Top Formation.measuring objective for a triple top formation is simply the downside projection
measured from the validation level of vertical distance between the resistance
level in a triple top formation and its validation level. Similarly, the minimum
one‐to‐one measuring objective for a triple bottom formation is simply the up-
side projection measured from the validation level of vertical distance between
the support level in a triple bottom formation and its validation level. Once this
minimum price objective is met, the formation would have obviated any pos-
sibility of a failure. See Figure 13.19 for an illustration of an idealized triple top
formation.
In Figure 13.20, we observe a completed triple top formation on the 15‐min
chart of EURUSD. Notice that it has not met the minimum one‐to‐one price objec-
tive and is therefore susceptible to pattern failure if price reverses back above the
resistance level formed by the three peaks.island tops and bottoms
Island tops and bottoms are reversal formations. Island top formations are pre-
ceded by an upside gap and subsequently followed by a downside gap, completing
the formation. Island bottom formations are preceded by an upside gap and com-
pleted by a subsequent downside gap. Volume could well be very heavy around
the peak in an island top formation or trough in an island bottom formation,
indicating a buying and selling climax, respectively. Conversely, volume could also