As of 06/20/2025
  Indus: 42,207 +35.16 +0.1%  
  Trans: 14,765 +39.30 +0.3%  
  Utils: 1,038 +5.45 +0.5%  
  Nasdaq: 19,447 -98.86 -0.5%  
  S&P 500: 5,968 -13.03 -0.2%  
YTD
-0.8%  
-7.1%  
 +5.6%  
 +0.7%  
 +1.5%  
  Targets    Overview: 06/13/2025  
  Up arrow44,000 or 41,200 by 07/01/2025
  Up arrow16,000 or 14,500 by 07/01/2025
  Up arrow1,080 or 1,010 by 07/01/2025
  Up arrow20,500 or 19,000 by 07/01/2025
  Up arrow6,150 or 5,850 by 07/01/2025
As of 06/20/2025
  Indus: 42,207 +35.16 +0.1%  
  Trans: 14,765 +39.30 +0.3%  
  Utils: 1,038 +5.45 +0.5%  
  Nasdaq: 19,447 -98.86 -0.5%  
  S&P 500: 5,968 -13.03 -0.2%  
YTD
-0.8%  
-7.1%  
 +5.6%  
 +0.7%  
 +1.5%  
  Targets    Overview: 06/13/2025  
  Up arrow44,000 or 41,200 by 07/01/2025
  Up arrow16,000 or 14,500 by 07/01/2025
  Up arrow1,080 or 1,010 by 07/01/2025
  Up arrow20,500 or 19,000 by 07/01/2025
  Up arrow6,150 or 5,850 by 07/01/2025

Bulkowski on Three Falling Peaks

Page updated and added examples: 6/10/25.

The 3 falling peaks chart pattern sports three peaks, each successive one is below the prior one. When price closes below the lowest valley between the three peaks, it confirms the three falling peaks chart pattern as valid.

The first sign of a trend change from up to down begins with a lower peak, so this chart pattern can be used as an indicator of the start of a bear trend either in an individual stock or the entire market (when it occurs in an index or average). Unfortunately, waiting for the pattern to confirm before exiting a position may mean a loss or large profit give-back, so its use as a bear market indicator is not recommended. Nevertheless, if the pattern appears, it means to avoid long positions.

My book, Encyclopedia of Chart Patterns, 3rd Edition takes an in-depth look at the three falling peaks chart pattern. This formation appears often, not only in the stock market, but in other markets as well. If you click the link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

Three Falling Peaks: Important Bull Market Results

Overall performance rank (1 is best): 21 out of 36
Break even failure rate: 22%
Average decline: 15%
Pullback rate: 66%
Percentage meeting price target: 23%
 
The above numbers are based on 2,300 perfect trades. See the glossary for definitions.

Three falling peaks chart pattern

The Three Falling Peaks Chart Pattern

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Three Falling Peaks: Identification Guidelines

CharacteristicDiscussion
Price trendUsually upward leading to the start of the pattern.
ShapeThree peaks, each one lower than the prior one.
SymmetryEach peak should look similar to the others. If you select wide, thick peaks, they should all look that way. The peaks do NOT have to follow a trendline.
ConfirmationThe pattern confirms as valid when price closes below the lowest valley in the pattern.

Three Falling Peaks: Trading Tips

Trading Tactic Explanation Three falling peaks measure rule
Measure Rule
Measure rule Reference the Measure Rule figure to the right. Compute the height from highest peak (1) to lowest valley (2) then multiply it by the above 'percentage meeting price target.' Subtract the result from the lowest valley (2) in the pattern to get a price target (3). The link highlighted on the left provides more information on the measure rule.
Valley short Reference the Valley Short figure to the right. For aggressive traders: If the first valley (point A, between peaks 1 and 2) is below the second (point B between peaks 2 and 3), use the second valley (B) as the confirmation price, not the lowest valley (A).
Stop Place a stop slightly above the most recent minor high (point 3) in the three falling peaks chart pattern. If you are unfamiliar with stop placement, click the link to the left.
Cover If price rises above any of the peaks, then cover the short. Three falling peaks alternate confirmation
Valley Short
Pullbacks Pullbacks hurt performance. The link to the left provides more information about pullbacks and this link provides performance.
 

Top of page More

Three Falling Peaks: Example

Three falling peaks chart pattern example

The above figure shows an example of the three falling peaks chart pattern. Peaks 1, 2, and 3 mark the three peaks of the chart pattern. Point 4 is the confirmation price, the price at which squiggles on the stock chart become a three falling peaks chart pattern.

Taking the height from peak 1 (the highest high in the three falling peaks chart pattern) and valley 4 (the lowest low between the three peaks), multiplying it by 23% (the percentage meeting price target from Important Bull Market Results table) gives a target of about 77. When the stock opened after the company issued an earnings warning, price gapped lower and reached the target the same day. Basing a new target on the full height (point 1 minus point 4, subtracted from point 4) gives a target of about 69. The stock reached that target within the month.

Top of page More

Three Falling Peaks: 10 Examples

The following is a slide show. Click the right or left arrows, or the circles below the chart to navigate around the slides.

 

1 / 10
Three falling peaks chart pattern

I label the three falling peaks pattern with 123. The horizontal red line at A shows the confirmation price. Price must close below this line (the lowest valley between the three peaks in the pattern) or else you don't have a three falling peaks pattern.

Price drops a meager amount in this example before rebounding.

The next chart gives more examples.
2 / 10
Three falling peaks chart pattern

Another example of a three falling peaks pattern with confirmation at red line A. The decline was substantial after the breakout (after a close below the red line).

The next chart gives more examples.
3 / 10
Three falling peaks chart pattern

Another example of a three falling peaks pattern with confirmation at the red line. Notice the small decline below the red line.

The next chart gives more examples.
4 / 10
Three falling peaks chart pattern

Another example of a three falling peaks pattern with confirmation at the red line. Notice that the decline isn't far before the uptrend resumes in February.

The next chart gives more examples.
5 / 10
Three falling peaks chart pattern

A three falling peaks chart pattern.

The next chart gives more examples.
6 / 10
Three falling peaks chart pattern

This three falling peaks pattern is also a symmetrical triangle.

The next chart gives more examples.
7 / 10
Three falling peaks chart pattern

A three falling peaks chart pattern. At A, the stock begins a pullback pattern (pullbacks happen 66% of the time in a bull market for this chart pattern). Note that the decline below the red line wasn't far. That happens frequently.

The next chart gives more examples.
8 / 10
Three falling peaks chart pattern

A three falling peaks chart pattern.

The next chart gives more examples.
9 / 10
Three falling peaks chart pattern

A three falling peaks chart pattern.

The next chart gives more examples.
10 / 10
Three falling peaks chart pattern

A three falling peaks chart pattern.

The End.

-- Thomas Bulkowski

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See Also

 

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