The three white soldiers chart pattern is a versatile technical indicator that could be applied across various asset classes. However, its effectiveness may vary depending on the asset’s liquidity, volatility and market conditions. Some asset classes where this pattern is commonly used are stocks, forex, commodities, ETFs, futures and options.
The “three black crows” candlestick pattern is the bearish equivalent of the “three white soldiers” pattern. It consists of three consecutive long bearish candles with small or no wicks, each closing lower than the previous candle. The three black crows pattern signals a strong shift in market sentiment from bullish to bearish. Traders can use this pattern to identify potential selling opportunities or add to existing short positions. The pattern is considered reliable, especially when confirmed by other technical indicators such as support and resistance levels, trend lines, and volume.
As a result, each of these candles should close at or near the previous highs. Strike offers a free trial along with a subscription to help traders and investors make better decisions in the stock market. Then the Three White Soldiers pattern formed and Price displayed signs of strength.
It must have little to no shadow at the top and bottom and be close above the preceding candle’s closing rate. As we can see from the TradingView chart below, the first candlestick is a long, bullish candle that indicates an active buying mentality. The second candlestick appears to be a long, bullish candle, opening higher than the one before it and trading upward during the session.
What is a SPAC – What is a SPAC Stock?
However, the ones who hold the greatest power to move the markets are not retail traders or investors like you and I but rather the “whales,” as they are commonly referred to. The three white soldiers is formed when the price action consists of three consecutive long-bodied candles that close near their highs double bottom forex with little or no wick. This suggests buyers were in control during each session, continuously bidding the price higher. The pattern shows strong and persistent buying pressure that overwhelms selling pressure. Prior reversal signals like doji candles may precede the emergence of this pattern.
The price paused for some time and the most interesting thing to note here is that there were virtually no wide-range bearish candles in the consolidation. HowToTrade.com takes no responsibility for loss incurred as a result of the content provided inside our Trading Academy. By signing up as a member you acknowledge that we are not providing financial advice and that you are making the decision on the trades you place in the markets. We have no knowledge of the level of money you are trading with or the level of risk you are taking with each trade. Watch this video to learn how to identify and trade the three white soldiers pattern with real trading example.
It generally occurs at the bottom of a market downtrend, indicating a reversal is about to break out. Three White Soldiers is one of the many Japanese candlestick patterns, a group that includes Doji Candles and Marubozu Candles. The opposite of the three white soldiers is the three black crows candlestick pattern. Three white soldiers catch the momentum shift from the bears to the bulls.
- Traders look for other confirmation signals, such as higher trading volume or support levels, before entering a trade based on this pattern.
- The pattern began to take shape when the stock opened slightly higher at $6.65 on the next trading day.
- Every day people join our community and we welcome them with open arms.
- In this example, EYES is trending upward from a consolidation in the morning.
What does Green Three white soldiers Candlestick tell?
- That reflected an almost eighteen percent increase within merely five days.
- In conclusion, theThree White Soldiers pattern is a reliableindicator of a bullish reversal, giving a clear signal of upward momentum.
- In addition, each candle must have a relatively long body and opening price above the closing price of the previous candle, ultimately creating a shape of the “V” letter.
- Contextually, it can come when there is a lack of supply in the market after a heavy sell off, signaling a big reversal.
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. The Three White Soldiers pattern is not particularly common on a trading chart. One analysis showed that it occurred only once in close to every 3,000 candles. First, you need to check that what you’re looking at is a three white soldiers formation (you can refer to our criteria mentioned above to identify this pattern). The three white soldiers pattern is a widely recognized bullish reversal pattern that can give traders five main how to start forex trading for beginners advantages in their trading strategies.
This candle must also have minimal to no shadow at the top or bottom and end higher than the preceding candle’s closing price. Similar to three white soldiers, the inverted hammer is also a bullish reversal signal. It consists of a small real body with a long upper shadow and little to no lower shadow. This indicates cmc markets review that, despite selling pressure, buyers were able to push the price up significantly during the session, though the price fell back to near its opening level. You can use Moving Averages (MA) with the three white soldiers pattern to pinpoint dynamic key price action levels, such as your possible entry, stop loss, and target profit areas. Traders use candlestick patterns rather than line charts because a candlestick reveals what happened in the trading session it covers.
Several other chart patterns bear similarities to the three white solders, each with its own nuances and predictive capabilities. Ensure there’s sufficient volume to validate that the pattern isn’t an anomaly and use another indicator such as MACD or RSI (Relative Strength Index) to confirm the trend. In this article, we will explain what the three white soldiers pattern is and how you can use it to trade. Pocketful is an advanced trading platform that empowers traders with cutting-edge technology. We provide innovative tools and resources to make trading more accessible and practical.
Therefore, waiting for confirmation and pairing the information the chart tells to create the best game plan for the situation is always important. Recently, we discussed the general history of candlesticks and their patterns in a prior post. Trading without candlestick patterns is a lot like flying in the night with no visibility. In this example, EYES is trending upward from a consolidation in the morning. Now that it is above its prior resistance, we get a little pullback in the price action — just enough to suck shorts into the trade.
Studying the three white soldiers pattern underscores the importance of alertness and flexibility in trading. Analyzing this pattern enhances a trader’s capabilities and underlines the need for a varied approach to market analysis. Effective use of this pattern depends on balanced application, awareness of its constraints, and a commitment to disciplined risk management. In this article, we will do a deep dive into 3 types of thrusting line candlestick patterns. We will then explore a few trading examples, so you can apply these techniques in Tradingsim.
How to Trade Three White Soldiers Patterns
Like many other advanced candlestick chart patterns, the three white soldiers candle pattern on its own might not be sufficient to indicate a trend reversal and enter a buying position. In summary, while the three white soldiers pattern holds value in a trader’s arsenal, it should not be the sole basis for trading decisions. A balanced approach that blends technical and fundamental analysis, coupled with robust risk management strategies, is essential for more insightful and effective trading.
Similar Candlestick Patterns
In addition, you can also use it as a “divergence” tool to identify possible mismatches with price action. For example, if the candlestick pattern successfully leads to an upward trend, you can use it to signal when momentum is diminishing—which is likely to lead to the end of an uptrend. In conclusion, theThree White Soldiers pattern is a reliableindicator of a bullish reversal, giving a clear signal of upward momentum. The pattern is easy to identify due to its simple structure and provides a complete trading setup for target and stop-loss levels.
We know that the three white soldiers is interpreted as a bullish signal that indicates the market has reversed from a downward trend to an upward trend. Conversely, the three black crows is interpreted as a bearish trend that indicates the market has reversed from an upward trend to a downward trend. This makes these two candlestick formations mutually exclusive for any given stock, commodity, etc. So, we know the three white soldiers pattern is a bullish signal reversal indicating a gradual advance of buying pressure following a downward trend. Well, because the bears are getting burnt out, their exhaustion acts as an enabler for the bulls to “soldier on” (pun intended). This is how the weakness in what was an established downtrend indicates a possible emergence of an upward trend.
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. The opposite of the three white soldiers is the three black crows candlestick pattern. Three black crows consist of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle. 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.
Here, we can see that STS supports a possible reversal brought by the candlestick pattern. Just like any other candlestick patterns, the three white soldiers pattern is not perfect. In this example, we can see a clear downtrend that preceded the potential bullish reversal pattern. However, after the three white soldiers formed, it failed to serve as a trend reversal pattern and drive an upward trend.
