Three Falling Peaks
BearishReversalIntermediateEach rally stops lower than the last. Buyers are losing ground.
Verdict: SkipBitcoin 4H: 2 trades, won 0%, avg trade −6.3% vs random day −0.4% (too few trades to judge). Backtest
After a rally, price makes a high and pulls back.
step 1/7
Trade rules
| Direction | Short (sell) |
|---|---|
| Entry | After the third peak is confirmed, a candle CLOSES below the lowest valley between the peaks, within half the pattern length plus 5 candles. Each peak is lower than the last by at least 15% of the pattern height, 5+ candles apart (neither gap over 3x the other), and the rally into it started below that valley. |
| Cancelled if | Price trades above the third peak before that close. |
| Target | Pattern height, projected from the breakout |
3 common mistakes
- Shorting the third peak before support breaks.
- Using the higher valley: the line to beat is the lowest one.
- Stop above the first peak: the third peak is what must hold.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 · too few trades to judge | 2 | 0% | −6.30% | −0.36% |
| US large caps (50) · 1D · 2016-2026 | 30 | 33% | −3.26% | −1.99% |
Verdict: SkipLost money on average on US large caps. Bitcoin had too few signals to judge.
pattern −98%random −60%