Dow Theory Patterns Unlocking Trading Opportunities with Double and Triple Formations

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    9. Marubozu and Bullish Marubozu Understanding What is Essential Single Candlestick Patterns for Traders
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    19. Bullish Harami Candlestick Pattern for Trend Reversal Strategies
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    26. Volume Trends How to Leverage for Successful Trading Strategy
    27. Volume Analysis A Key Checklist for Successful Stock Trading
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    34. Bollinger Bands The Power of Indicators in Trading and checklist
    35. Fibonacci Retracements Unravelling the Power in Stock Markets
    36. Mastering Fibonacci Retracement A Step-by-Step Guide for Effective Trading
    37. Dow Theory Decoding Unveiling the Principles of Technical Analysis
    38. Dow Theory Patterns Unlocking Trading Opportunities with Double and Triple Formations
    39. Trading Range Explained chart indicator example strategy Profit from Market Ranges
    40. Flag Pattern and Range Breakout How to Capitalise Trading Beyond Boundaries
    41. Risk reward ratio Understanding RRR in Dow Theory
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Marketopedia / Technical Analysis / Dow Theory Patterns Unlocking Trading Opportunities with Double and Triple Formations

The Dow Patterns

Patterns in Dow Theory can be used by traders to identify trading opportunities. These patterns include:

  1. The Double bottom & Double top formation
  1. The Triple Bottom & Triple Top
  1. Range formation, and
  1. Flag formation

The Dow Theory gives great importance to the support and resistance levels, so much so that an entire chapter was devoted to it earlier on. This is because it helps in setting targets and stop-loss for trades.

The Double bottom and top formation

A double top & double bottom are often seen as a signal of reversal. The double bottom is created when a stock price falls to a shallow level, briefly recovers and then trades higher for at least 2 weeks before moving back down towards the previous low. If the stock manages to support itself and thus bounces back up, then the pattern of a double bottom is fulfilled.

The triple top and bottom

As you may have guessed, a triple formation is similar to a double formation, except that in this case the price level is tested three times rather than two. The reading of the triple bottom is analogous to that of the double bottom.

As a general rule, the more frequently a price level is tested and reacted to, the more respected it is. This is why the triple formation is considered to be more influential than the double formation.

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