How to Trade the Three White Soldiers Pattern in 2 Easy Ways

A series of three bullish candles that are extremely large can indicate that the bullish opposition has overextended itself by pushing too hard too quickly. For more information on candlestick patterns, please check out our free technical analysis section devoted to these great trading tools. In trading, 3 White Soldiers is the name for a Japanese candlestick pattern that reverses from falling to rising in price.

  1. The size and shape of the bodies should remain consistent within the pattern.
  2. Traders should use additional confirmation tools and consider market conditions when interpreting this pattern.
  3. Here are the key takeaways you need to consider when using the three white soldiers pattern.
  4. Three white soldiers is a bullish candlestick pattern that is used to predict the reversal of the current downtrend in a pricing chart.
  5. The consecutive nature of the pattern visually demonstrates the increasing dominance of buyers and a shift in market sentiment towards bullishness.

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Candlestick Charts – Reversal Patterns

This is a warning that the market will reverse and create an uptrend in the future. Three White Soldiers candlestick pattern is a special Japanese candle pattern. This is a good signal of the price at the beginning of a strong uptrend. Traders always pay attention to this 3 white soldiers candle pattern whenever it appears on the price chart.

How to trade Binary Option effectively with this pattern

This pattern can help enhance trading strategies, improve risk management, and increase the probability of successful trades in various financial markets. Understanding and recognizing the Three White Soldiers pattern is essential for wealth managers and traders. This pattern provides valuable insights into potential trend reversals, allowing investors to capitalize on emerging bullish opportunities. Two of the most effective indicators dowmarkets to confirm trend reversals are the Relative Strength Index (RSI) and the Stochastic oscillator. In essence, these technical analysis tools indicate overbought and oversold areas and thus, may help you to identify a potential reversal zone. Using the additional technical indicators alongside the three white soldiers chart pattern has the potential to enhance its reliability and provide a more comprehensive trading strategy.

Requirements for Confirmation

The three white soldiers is a bullish trend reversal candlestick pattern that can help determine future price movements. In addition, the upper wicks are short or non-existent, indicating that bulls managed to keep the price of the security near the height of its range for the period. The wide trading range reflected in the large bodies of all three candles and the lack of any substantial upper shadow indicates the strength of bullish momentum. As with coinmama exchange review any reversal pattern, an expansion on volume accompanying the three white soldiers lends additional strength to the signal. The three white soldiers pattern and its bearish counterpart, the three black crows, are considered fairly robust reversal signals by both analysts and traders. The bullish pattern consists of three consecutive long-bodied candlesticks that open within the previous candle’s real body and close above the previous candle’s high.

Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning. This is more of an anticipatory strategy if you sense heavy demand in the tape or Level II. After the completion of the formation you can make a decision to add or cut the trade depending on the context. However, the silver lining in the EYES example is that we did retest the high of the third soldier candle two times, and both times held the new trend well. Otherwise, you might wait for a pull back to retest the demand in these three candles and take your long position there. Trying to time the bottom can be difficult and risky, you never know when the stock could flush lower, stopping you out.

After the Three White Soldiers pattern has formed, the price might consolidate for a while before moving again. No trading tool or indicator is perfect and understanding the pattern’s limitations will help you decide whether it fits your personality axitrader review or not. In this chart, the price had a nice and clean move up before going into a consolidation. Yes, the sample size is low I agree, but that’s because the pattern is rare to find, and even then, the numbers don’t look great.

Experienced traders prefer their patterns to start and move with a sense of urgency. For this reason, you could initiate a position into the runup of the three white soldiers, adding as volume confirms. As a consolation, if the pattern is extremely bullish with accompanying volume, you might decide to put your stop at the low of the last soldier candle. 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.

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