Three Line Strike Candlestick Pattern

The Three Line Strike is a technical analysis technique that aims to identify potential turning points in the market. It is considered a rare pattern and falls under the category of trend continuation patterns, which are used to predict the likelihood of a trend continuing. This candlestick pattern was developed using traditional Japanese candlestick charting methods, which have been used for centuries to analyze market trends and forecast price movements. To locate this pattern, traders can use a daily scan, and it can be utilized as a bearish entry point in a downward trend.

The Three Line Strike pattern is characterized by three long white or black candlesticks, with each subsequent candle closing at a higher or lower price than the previous one. When the pattern appears on a chart, it indicates that the market is trending in a particular direction and that a reversal may be imminent.

What is the Three Line Candlestick Pattern?

The Three Line Strike pattern can be used to identify entry and exit points in the market. For example, if a trader sees a Three Line Strike pattern forming on a chart of the USD/JPY currency pair, they may decide to enter a trade in anticipation of a potential reversal.

The candles that form the pattern are typically long and white or black, depending on the direction of the trend. In a bullish trend, the candles will be white, while in a bearish trend, they will be black. The length of the candles is important because it indicates the strength of the trend, with longer candles indicating a stronger trend.

The Three Line Strike pattern can be utilized to identify potential reversal points in the EUR/JPY currency pair when applied to the market. For instance, a trader who notices a Three Line Strike pattern forming on a chart of the EUR/JPY may decide to enter a trade in expectation of a potential reversal.

There are several key points to support the strategy of using the Three Line Strike pattern in forex trading:

  • It can be used to identify potential reversal points in the market.
  • It is based on the principles of Japanese candlestick charting techniques, which have been used for centuries to analyze market trends and forecast price movements.
  • The Pattern is useful in identifying the price action of the market as a whole.

Three Line Strike Strategy

Bullish Three Line Strike Candlestick Pattern

  • The pattern appears at the bottom of a downtrend, indicating a potential reversal.
  • The candles that form the pattern are long and white, indicating a strong bullish trend.
  • The closing price of each subsequent candle is higher than the previous one, indicating a bullish trend.
Bullish Three Line Strike Candlestick Pattern
Bullish Three Line Strike Candlestick Pattern

Bearish Three Line Strike Candlestick Pattern

  • A potential reversal may be signaled by the appearance of the pattern at the top of an uptrend.
  • The pattern is characterized by long, black candles, which suggest a strong bearish trend.
  • The bearish trend is further indicated by the closing price of each subsequent candle being lower than the previous one.
Bearish Three Line Strike Candlestick Pattern
Bearish Three Line Strike Candlestick Pattern

Three Line Strike Pattern Pros & Cons

Pros

  • It helps traders in identifying the market potential reversal points.
  • It is based on the principles of Japanese candlestick charting techniques, which have been proven to be effective in forecasting market trends
  • It can be use as basis for the take profit and stop loss of your trade

Cons

  • It Lags, sometimes it shows in the market but the trend is not in conjunction to its predicted movement.
  • It may not always accurately as it is not a complete combination of trading indicators.
  • It may produce false or uncertain signal in a range-bound markets.

Conclusion

The Three Line Strike Candlestick Pattern is a technical analysis technique that can help traders locate potential reversal points in the forex market. By evaluating the length and color of the candles forming the pattern, traders can potentially identify entry and exit points in the market. While it is not a flawless indicator and may generate false signals under certain market conditions, it can be a useful addition to a trader’s arsenal of strategies.