Three Rising Valleys/falling Peaks

What are Three Rising Valleys and Three Falling Peaks?

Three rising valleys and three falling peaks are a mirrored pair of chart patterns catalogued by Thomas Bulkowski in his Encyclopedia of Chart Patterns. Three rising valleys is three successive valleys, each bottom above the one before, confirmed when price closes above the highest peak in the pattern. Three falling peaks is three successive peaks, each lower than the one before, confirmed when price closes below the lowest valley in the pattern.

The read is structural. Rising valleys show buyers stepping in at higher prices on each dip; falling peaks show sellers arriving earlier on each rally, the higher-low and lower-high logic of swing structure. Bulkowski keeps the shape rules loose: the valleys or peaks should look alike (all narrow or all wide, not mixed), and falling peaks need not line up on a trendline. The confirming close is what makes it a pattern.

Bulkowski notes that price usually rises into both patterns, so three rising valleys can act as a continuation or a reversal (continuations performed better in his data), while three falling peaks after an advance records a weakening rally.

How to identify three rising valleys or three falling peaks

Find the swings first, then let the confirmation level decide.

1. 1Find three swing lows, each above the last, or three swing highs, each below the last, similar in size and shape.
2. 2Mark the confirmation level: the highest peak inside the three rising valleys, or the lowest valley inside the three falling peaks.
3. 3Confirm only on a close beyond that level; until then the shape is just a sequence of swings.
4. 4For a target, Bulkowski's variant of the measure rule takes the height from the highest peak to the lowest valley, scales it by the share of his historical samples that reached a full-height target, and projects the result from the confirmation level.
5. 5Place stops beyond the latest swing: below the third valley for longs, above the third peak for shorts.

How traders use it

• Confirmation entries: trade the close beyond the confirmation level, giving up entry price for a completed pattern.
• Early entry: when the highest peak of a three rising valleys sits between the first two valleys, Bulkowski draws a down-sloping trendline across the two highest peaks and treats a close above it as an earlier buy signal.
• Short management: after three falling peaks, his rule of thumb is to cover if price climbs back above any of the peaks.

Rising valleys and falling peaks vs lookalikes