In the world that I grew up trading in there was a slogan,”there is no such thing as a triple top.” But if you search the internet today you will find many references to triple tops, including several at Investopedia. Well the study of price action is always evolving so why not in this aspect. It is the actual price action that matters, not what I think or anyone else thinks.
We are lucky enough to have a live example of a possible triple top in the Russell 2000 ETF, $IWM. The IWM is seen in the chart below, pulling back Monday from a third top just over 160. Will this be the ultimate top in the market before a major correction? Or will it push through to the upside? Lets examine the case for each.
First the argument for a triple top and reversal lower. There are several things that will need to happen to confirm this as a top rolling over. First would be a lower low, under the May 1st low. Next would be a break of the 200 day SMA, currently at about 150. Then a drop below the February low. Momentum is stalling and shifting, so this is a possibility.
The argument for new all-time highs is made first through the current price action. After 6 days of higher prices the IWM paused today, after making a new intraday all-time high. This did pull the RSI lower but it remains in the bullish zone and the MACD continues to move higher. A new closing high would give a lot of support to the bullish case. For now there is a higher high following a higher low. Just a normal consolidation after 6 days higher.
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