3 Bar Play Pattern

What is the 3 Bar Play Pattern?

The 3 Bar Play Pattern is a trading strategy used in the forex market to identify potential trend reversals. This pattern involves analysing the price movement over three consecutive bars on a price chart and looking for specific patterns that suggest a shift in market sentiment. Traders often use this pattern to enter trades with a high probability of success and to minimize their risk. The 3 Bar Play Pattern can be applied to various time frames and currency pairs and is a tool in any trader’s arsenal. In this article, we will take a closer look at how the 3 Bar Play Pattern works and how it can be used in forex trading.

3 Bar Play Pattern Strategy

3 Bar Play Pattern Strategy
3 Bar Play Pattern Strategy

Here’s a strategy for trading the 3 Bar Play Pattern in the forex market:

  • Step 1: Identify the Pattern

The first step in this strategy is to identify the 3 Bar Play Pattern on a price chart. Look for three consecutive bars that have a specific pattern, such as a bullish or bearish engulfing pattern, a hammer or a doji candlestick pattern. The first two bars should have a similar high and low, while the third bar should break out in the opposite direction.

  • Step 2: Confirm the Pattern

Once you have identified the pattern, the next step is to confirm it. Look for additional signals that support the pattern, such as a trend line or a moving average. This can help to increase the probability of the trade being successful.

  • Step 3: Enter the Trade

Once the pattern has been confirmed, it’s time to enter the trade. Enter a long position if the pattern is bullish or a short position if it’s bearish.


Buy Signal

Here are the details of a buy signal using the 3 Bar Play Pattern:

  • Look for three consecutive bars on a price chart that form a bullish pattern, such as a bullish engulfing pattern, a hammer or a morning star pattern.
  • The first two bars should have a similar high and low, while the third bar should break out in the opposite direction and close above the high of the previous two bars.
  • Confirm the pattern by looking from additional signals that support the bullish bias, such as a rising trend line or a bullish divergence on an oscillator.

Sell Signal

Here are the details of a sell signal using the 3 Bar Play Pattern:

  • Look for three consecutive bars on a price chart that form a bearish pattern, such as a bearish engulfing pattern, a shooting star, or an evening star pattern.
  • The first two bars should have a similar high and low, while the third bar should break out in the opposite direction and close below the low of the previous two bars.
  • Confirm the pattern by looking from additional signals that support the bearish bias, such as a falling trend line or a bearish divergence on an oscillator.

3 Bar Play Pattern Pros & Cons

Pros

  • Easy to Identify: The 3 Bar Play Pattern is a relatively easy pattern to identify on a price chart, making it accessible for traders of all experience levels.
  • High Probability: The pattern is a reliable indicator of a potential trend reversal, which means that the probability of a successful trade is higher.
  • Works on Different Time Frames: The 3 Bar Play Pattern can be applied to various time frames, making it a versatile tool for traders.

Cons

  • False Signals: Like any technical analysis tool, the 3 Bar Play Pattern is not infallible and can produce false signals that lead to losing trades.
  • Subjective Interpretation: The interpretation of the pattern can be subjective, which means that different traders may identify different patterns and take different trading decisions.
  • Not a Standalone Strategy: The 3 Bar Play Pattern should be used as part of a broader trading strategy that includes risk management, trade management, and technical analysis tools.

Conclusion

In conclusion, the 3 Bar Play Pattern can be a tool for forex traders to identify potential trend reversals. It is a relatively easy pattern to identify and can be applied to different time frames, making it accessible and versatile. However, traders should be aware of its limitations, such as the possibility of false signals and the need for confirmation through additional indicators or signals. It is also essential to use the 3 Bar Play Pattern as part of a broader trading strategy that includes proper risk management and trade management techniques. By doing so, traders can increase their chances of success while minimizing potential drawdowns.

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