3 Peaks and a Domed House Chart Pattern

Stock Chart Patterns

George Lindsay's 3 Peaks and a Domed House

The 3 Peaks and a Domed House chart pattern is a little known bearish reversal stock chart pattern that was discovered by stock market analyst George Lindsay who issued a market advisory letter through the 1950s to the 1970s. His forecasts identified points in time where he believed a turn in the market was likely and even indicated the magnitude of the ensuing moves.

Although there was also a booklet available, there is very little known of George Lindsays work as he did not write much about his discoveries or publish his findings in a book, although some of his work  was later published in an updated version of the Encyclopedia of Stock Market Techniques. Articles by the Late George Lindsay can still be obtained from Investor Intelligence.

The 3 Peaks and a Domed House Chart Pattern

This is a graph of George Lindsays idealized Three Peaks and a Domed House chart pattern which shows the basic shape that the pattern should take, in real time trading it can have slight variations but the basic shape and points must be as shown to become a valid pattern.

I have seen many analysts force this pattern on to a chart with points missing or out of proportion with the rest of the chart and invariably the pattern 'fails' so as with all technical analysis systems and chart patterns, it is essential to  follow what is actually there and not force the pattern into a chart that it does not fit into.

George Lindsays 3 peaks and a domed house chart pattern

The Idealized Three Peaks and a Domed House Chart Pattern

The Three peaks and a domed house pattern is so called because the first half of the basic shape takes the form of 3 Peaks followed by a pattern that looks similar to the shape of a domed house.

The Three Peaks Pattern

The Three Peaks part of the pattern is very straight forward where points 1-2 form the base before a sharp rise to point 3, points 3-7 then form the three peaks pattern before a separating 3 wave decline into point 10.

The Domed House Pattern

The secondary base within this stock chart pattern is created by an initial rise off the low at point 10 followed by two corrective waves forming points 11-14 and this double correction is an essential component of the domed house pattern.

The wall of the domed house is created by a sharp rise into point 15 where the roof of the first story though to point 20. The second story of the house is created by another sharp rise into point 21. The top or the Dome part, takes the shape of a Head and Shoulders Pattern where 21 and 25 are the shoulders separated by a final burst of energy into the Head at point 23.

The sharp declines into points 26 and 28 form the other side of the walls.

The Three Peaks and a Dome chart pattern gives us an incredibly accurate price target for its completion as point 28 always returns to withing a few points of the price level of point 10.

The Three Peaks and a Dome Pattern - Time Frame

The idealized 3 peaks and a dome chart pattern that George Lindsay identified was initially discovered on the daily charts. He found that the Three Peaks part should take around 8 months to form, and the Dome part of the pattern around 7 months.

Traders Day Trading believes that if a chart pattern is a valid entity within technical analysis then the same pattern must be valid on all time frames. Chart patterns are a reflection of the sentiment of mass participation by the markets as a whole, and as such it is logical that  as the markets participants travel through different degrees of fear and greed throughout the cycles on the various time frames, it must be that  a valid chart pattern can occur at any degree of time.

What we look for is that the pattern forms correctly with all points are accounted for and that the pattern forms in proportion, in other words it must have the right look about it as it forms to be considered worth following.

The Domed House and Three Peaks Chart Pattern

George Lindsay also identified a very little known variation on his original pattern where the Domed House pattern formed first and was then followed by the Three Peaks part.

Domed House and 3 Peaks Chart Pattern 

Domed House and 3 Peaks Chart Pattern

The Domed House and 3 Peaks pattern forms identically to the 3 Peaks and a Domed House chart pattern except it is the Dome part of the pattern that forms first. You will observe here that points 28 and 1 are one in the same.

The price target in this variation of the pattern is that it is point 10 that returns to the level of point 28.

Examples of The 3 Peaks and a Domed House Chart Pattern

Does the 3 Peaks and a Dome pattern actually work and can you actually use it for trading in real life?

This is an extremely good real life example of the 3 Peaks and a Domed House chart pattern that I recently posted live on the net  as the pattern unfolded. These charts are of the Ftse100 from the period of January 2008 through to July 2008.

You may recall it as a period when the media and politicians were labeling it as an 'unexpected' or 'unprecedented'  time for the markets where nobody could have known what was about to happen....

3 Peaks and a Domed House

Example of the Three Peaks and a Domed House - Ftse100 Jan2008 - May2008

The following charts posted live at the time show the ensuing price action and is a prime example of why I use technical analysis instead of listening to the news for my trading and investment decisions.

3 Peaks Chart Pattern

Example of the Three Peaks and a Domed House - Ftse100 Jan2008 - Jun2008

Three Peaks and a Domed House

Example of the 3 Peaks and a Domed House - Ftse100 Jan2008 - Jul2008

As you can see, this example of the 3 peaks and domed house netted nearly 1000 points on Ftse 100 over a month and a half so it is well worth following these chart patterns when they form properly.


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