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Below is a picture of what I would call a “triple top” (first grey circle). In forex trading of Japanese Candlesticks, the triple top is not so strong a signal as the double top, but nonetheless the one in the diagram is a good one. Notice how the price hits the resistance first once, then twice (double top - short signalled on confirmation) and then the third time (triple top) confirming the support level and then we see the meat of the short. We are also above the Bollinger Bands - see the following post: http://sambeatson.com/?p=30. From that earlier post, we know that the price should lay within the bands 95% of the time so the market is overbought in that respect anyway. This is followed by the next pattern which is bearish continuation (three long candles all well within the lower body of the previous bearish candle) and I have then circled a classic double top,but in a non-oversold/non-overbought market making it more challenging to trade live…but if you recognised the bearish continuation pattern, tradable (4 hourly chart of USD/JPY).
Forex Illustration
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That’s all for now,
Sam
