Triple Tops and Bottoms, Liquidity in Disguise

[Fairman]

Triple Tops and Bottoms, Liquidity in Disguise

Classic chart pattern books describe a triple top as a strong reversal signal. Through a liquidity lens, it looks different: three highs at the same level mean a lot of stop orders sitting just above.

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Why this matters: the more times price touches a level, the more traders place stops beyond it, and the more tempting that level becomes for a sweep.

Possible outcomes:

A sweep and reversal. Price pushes above the highs, grabs stops, then falls. The classic reversal pattern traders hoped for appears, but only after the trap.

A genuine breakout. Price closes above, retests, and continues upward, trapping short sellers.

How to approach it:

1. Mark clear triple tops or bottoms on the 1H or 4H.
2. Don't enter on the third touch alone.
3. Wait for a sweep beyond the level, followed by a close back inside, or a convincing breakout with a retest.
4. Confirm with a lower-timeframe shift.
5. Place stops beyond the sweep, and target the opposite liquidity.

Lesson: patterns taught in books describe what traders see. Liquidity thinking asks what other traders are doing and where their orders sit.

Look at your last five triple tops and bottoms. See which behavior followed: sweep, breakout, or something else.

Observation builds judgment faster than memorizing patterns.

[LondonNewsTrader]

Three equal highs on the 1H usually have a calendar story behind them as well. Price stalls at the same level two or three times because the market is waiting for something, and quite often the sweep you describe happens on the release itself rather than on a random London candle.

That changes step 3 for me. If the move above the highs comes in the first minute after CPI or a central bank decision, the wick is partly spread and thin liquidity, and it may look different on your broker's bid chart than on someone else's. I judge the "close back inside" on the second or third M5 bar after the print, not the release bar.

Same issue with step 5. A stop placed beyond a wick that was printed during the spike is sitting at a price that only existed for a few seconds, so I give it extra room or cut the size. On a quiet day your rules work as written.

[FXS Prop Desk]

Seeing a triple top as resting liquidity rather than a reversal promise is a useful perspective. In practice, the more touches a level has, the more likely it is to be swept before any reversal. For anyone trading the reversal, that means either a stop placed beyond the likely sweep area, or waiting until after the sweep and entering on the close back below the level.

The second option misses some moves, but it avoids being the stop that funds the sweep. For the breakout side, a close above with a successful retest is the stronger sign that the level has truly given way.

[Shadow Trader]

One detail that changes the numbers here is that the three highs are rarely equal to the pip, and the sweep usually runs only a few pips past the highest one. A stop placed 2 pips above the visible highs sits exactly where the move is built to reach.

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The chart is a made up EURUSD H1 example with tops at 1.1683, 1.1685 and 1.1684, then a candle that sweeps to 1.1691 and closes back inside at 1.1679. Selling that close with the stop at 1.1693 risks 14 pips, and the range low at 1.1640 is 39 pips away, close to 2.8R.

The way I separate a sweep from a real breakout is time spent above the level. If two H1 candles in a row close above the highest top, I stop treating it as a trap and look for the retest instead, as FXS Prop Desk described.

LondonNewsTrader's release point applies to that 1.1691 print as well. If the wick came in the first minute after a release, I would wait for M5 structure first.

How far apart can three tops be before you stop calling them a triple? I allow about 10 percent of the average H1 range, usually 2 to 3 pips on EURUSD.