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What Does the Three White Soldiers Pattern Mean?

Three white troops occasionally emerge during consolidation, which is an easy way to get caught up in the process. One should also check to see if the volume supports the creation of three white troops. On the weekly chart of Apple, not even a single occurrence of the pattern was found.

Thrusting Candlestick Pattern: Learn How To Trade It

This pattern can be a strong reversal indicator and is worth understanding to build up your trading toolkit. Get the lowdown on the Abandoned Baby candlestick pattern with this trading guide. To trade the pattern, you will have to add extra filters or conditions that reduce the number of false signals, to ensure that you only take those trades that have the highest odds of success. On the other hand, three white soldiers indicate a shift from the bears to the bulls and is made of three consecutive bullish candlesticks. The Three White Soldiers and Three Black Crows patterns are similar in their appearance, with three consecutive candles how is information different from data and little to no wicks. The difference lies in their market sentiment, occurrence, and interpretation, which can lead to different trading strategies.

• Traders must look for the pattern to appear on a more extended time frame chart to establish a bullish trend.
• The relative strength index (RSI), for example, may have moved above 70.0 levels.
• For it to be considered the ‘three white soldiers’ pattern, the three consecutive bullish candles must occur ONLY during downtrends.

The opposite of the three white soldiers pattern is the “three black crows” pattern. This bearish reversal pattern is formed when three consecutive long bearish candles appear on a chart. The three black crows pattern indicates a shift in market sentiment, but in the opposite direction. The Three White Soldiers candlestick pattern is commonly used in technical analysis by traders and analysts in the stock market, forex market, and other financial markets.

How to Trade a W Pattern

The three black crows is a four-candle bearish reversal pattern almost opposite the three white soldiers. With the pattern identified, fantastic forex traders enter long when the price moves below and above the pattern’s low, setting a stop loss of one ATR. We can see the three white soldiers pattern on the Agilysis (AGYS) daily price chart on July 8th, 2013. For professional-grade stock and crypto charts, we recommend TradingView – one of the most trusted platforms among traders. The pattern is made up of three succeeding long-bodied candles that open within the preceding candlestick’s actual body and close above the preceding candlestick’s high.

The candles are white because positive price movement in eastern technical analysis is represented white and not green (as most charting platforms default to these days). The Three White Soldiers is a bullish Japanese candlestick reversal pattern consisting of three consecutive white bodies, each with a higher close. Traders should look for high trading volume during the pattern’s formation as a sign of its strength. Additionally, seeing a subsequent bullish candle, like a bullish engulfing candle, can provide further validation.

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Strike offers a free trial along with a subscription to help traders and investors make better decisions in the stock market. Investopedia does not provide tax, investment, or financial services and advice. The information is presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. The only reason the three black crows and the three white soldiers aren’t opposites is that the three black crows require the first bearish candle to close under the previous bullish Forex correlation candle’s high. Unlike cryptocurrency traders, stock and forex can use the data to outperform traditional trading methods significantly. Open an FXOpen account today to explore many opportunities across more than 600 markets and take advantage of our low-cost, high-speed trading environment.

• Similar to three white soldiers, the inverted hammer is also a bullish reversal signal.
• To trade the Three White Soldiers candlestick pattern it’s not enough to simply find a pattern with the same shape on your charts.
• But we also like to teach you what’s beneath the Foundation of the stock market.
• Pocketful is an advanced trading platform that empowers traders with cutting-edge technology.

Lastly, you can simply use structural support and resistance levels with the three white soldiers pattern. This is done by pinpointing the native support and resistance levels of an asset’s market structure. Unlike other technical indicators—which can be dynamic—market structure is static and uses historical chart data to identify key price levels. As you can see, the pattern appears at the bottom of a bear market and consists of three bullish candles. The three white soldiers is a bullish candlestick formation seen on candlestick charts that occurs at the bottom of a bearish trend and indicates that the price could soon reverse. The ETF had been in a strong bearish downtrend over the course of several weeks before the three white soldiers pattern marked a sharp bullish reversal.

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Traders use this pattern as a signal to create long positions, as it often reflects a shift in the market control from sellers to buyers. Understanding that “ThreeWhiteSoldiers” can help the investors to identify the potential upward trends in stock or asset prices. Like other technical indicators such as MACD, you can use the Stochastic Oscillator (STS) with the three white soldiers pattern to help identify shifting market sentiment. When the blue line crosses above the orange line, it signifies a shift towards bullish momentum.

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As with any reversal pattern, an expansion on volume accompanying the three white soldiers lends additional strength to the signal. For it to be considered the ‘three white soldiers’ pattern, the three consecutive bullish candles must occur ONLY during downtrends. In any other market condition (i.e., during an uptrend or in a sideways market), the three consecutive bullish candles are just normal candles that do not serve as a reversal pattern. Like any trading pattern, the reliability of the three white soldiers depends on numerous key factors, including market conditions, market sentiment, and external confirmations. This can then create scalping opportunities on lower timeframes (i.e., seconds, minutes, or hourly) to take advantage of the heightened volatility of the asset. This validates the candlestick pattern and provides an additional signal for an upcoming trend reversal.

Three Drives Pattern: A Powerful Tool for Reversal Trading

Three long-bodied candlesticks with little to no shadow at the top or bottom close successively higher than the preceding candlesticks to form the pattern. The 3 soldiers pattern reflects a shift in market sentiment from bearish to bullish. When the 3 green soldiers form after a downtrend, it signals that buyers are gaining control, overcoming previous selling pressure. This pattern consists of three consecutive bullish candles, each with a long real body and little to no shadows. The three candles should ideally open within the previous candle’s body and close progressively higher. As shown, a steep downtrend—characterized by a significant price decline over a short period of time—was established before the candlestick pattern appears.

So, this one is a slightly wilder stock in the sense that wide bearish candles were printed on the chart. But notice how none of these scary-looking candles had any meaningful follow-through. A trader must clearly understand where the zone of opportunity lies for their trading strategy. Everyone should decide for themselves how to act in a similar situation. I prefer to wait for the corrective movement and buy the instrument from rollback. If the price does not roll back and immediately goes into growth, I usually just skip such signals.

Each day our team does live streaming where we focus on real-time group mentoring, coaching, and stock training. We teach day trading stocks, options or futures, as well as swing trading. Our live streams are a great way to learn in a real-world environment, without the pressure and noise of trying to do it all yourself or listening to “Talking Heads” on social media or tv. The three-white soldier pattern is typically seen as more useful for long-term traders because it takes three days to form.

Whereas three white soldiers catch the momentum shift from the bears to the bulls, three black crows show the bears taking control from the bulls. The same caveats about volume and additional confirmation apply to both patterns, though confirming volume is more important in the bullish pattern. When a bullish candle closes with small or no shadows, it suggests that the bulls have managed to keep the price at the top of the range for the session. Basically, the bulls take over the rally all session and closed near the high of the day for three consecutive sessions.

Now that you have the image of the three white soldiers candlestick pattern in your mind, hopefully you’ll begin to see the pattern on your charts more often. Sometimes studying candlestick patterns can be a lot like listening to a new song, it gets stuck in your mind. When trading the three white soldiers pattern, it’s important to note that the strong moves higher could create temporary overbought conditions. The relative strength index (RSI), for example, may have moved above 70.0 levels. In some cases, there is a short period of consolidation following the three white soldiers pattern, but the short- and intermediate-term bias remains bullish. The significant move higher could also reach key resistance levels where the stock could experience a period of consolidation before continuing to move higher.

Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning. A Three White Soldiers appearing after this bearish move is a sign of a possible reversal to the upside. What makes a pattern valid is not just the shape, but also the location where it appears.