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Three Falling Peaks is a bearish continuation pattern consisting of three successive rally highs, each lower than the previous one, connected by pullback troughs. Each bounce fails at a lower level, showing persistent selling pressure.
This is the mirror image of Three Rising Valleys. The pattern confirms that sellers are in control — each relief rally is weaker than the last, and the breakdown below the lowest trough confirms the bearish trend.
The pattern is particularly useful in identifying distribution phases where smart money is selling into each rally before the next leg down.
Each peak represents a weaker attempt to rally. Sellers are willing to sell at progressively lower prices, showing urgency to exit positions.
Three failed rallies destroys bullish sentiment. Traders who bought each dip are underwater and increasingly desperate. By the third failed peak, hope has shifted to fear.
The breakdown below the lowest trough triggers forced selling from all the dip-buyers across the three peaks. This accumulated trapped-long liquidation makes the breakdown move powerful.
Short on breakdown below the lowest trough between the peaks with volume confirmation.
Above the third (lowest) peak. This is the most recent lower high.
The height of the pattern projected downward from the breakdown point.
Typically 1:2 when the pattern is well-formed.
Three Falling Peaks show systematic distribution. Each rally sold at lower prices means persistent supply pressure.
Three falling peaks is distribution in slow motion. Each lower high is sellers getting more aggressive. Don't buy the third dip.
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