The Three White Soldiers is a reversal pattern that indicates the possible ending of a current downtrend. It compromises of three long bullish candles. The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle’s real body and a close that exceeds the previous candle’s high. The reverse of the three white soldiers is called the three black crows. This pattern is represented by three consecutive red candlesticks that occur at the top of an uptrend.
What is the Three White Candlestick Pattern?
The pattern’s three candles don’t have a long wick and open within the previous candle’s real body. Also, it emerges in a downtrend.
The first of these candles is called a reversal candle. It either suggests the ending of a downtrend or tells that the period of consolidation (an indecisive period which ends when the price moves above or below current prices) has come to an end.
The second candle is more significant than the first candle. It closes near the high, showing a small or no wick.
The last candle is longer or equal to the second candle. It has small or no wick.
When a candle closes with a small or no wick, it describes that the bulls have managed to keep up the price.
The overall development of the pattern symbolizes three advancing soldiers. And it was called three marching soldiers up until the Second World War.
Sometimes, the Three White Soldiers Candlestick Pattern appears after another reversal pattern, such as Doji.
Here’s what the Three White Soldiers Candlestick Pattern looks like on a chart:
The inverse of the Three White Soldiers is the Three Black Crows Candlestick Pattern. It shows that bears take control from the bulls, signaling a reversal.
Both Three White Soldiers and Three Black Crows rarely appear on the forex charts. You can spot these candlestick patterns on long and short term timeframes. They can appear on forex currency pairs, stocks, indices, cryptocurrencies, commodities, metals, energies, gold, silver and more.
How to use the Three White Soldiers Candlestick Pattern?
The pattern provides traders with possible entry and exit points, thus giving optional trading signals for going long or short.
When the pattern surfaces, those who are on the short side, may look to exit the trade, while traders looking to go long, may start to consider an entry.
When trading the pattern, a trader should know that the pattern’s sharp rise can create an overbought condition. For example, the Stochastic Indicator can go above the 70 level.
Occasionally, a short consolidation period occurs after the Three White Soldiers, but the overall trend remains bullish. If this consolidation becomes longer, Three White Soldiers may not work in this case because it could be a signal of the continuation of the trend rather than a reversal.
Also, there are situations when the Three White Soldiers are present, but the price goes down. This may not be a suitable entry time.
One thing to look for is the volume of the pattern. If the pattern has a low volume, the Three White Soldiers may also not be worthy of a trade. You can use the volume indicator to measure current market volume.
To solve this problem, a trader can wait for the formation of the pattern near the resistance level, until there is a breakout confirmation, and then start a buy trade.
Essentially, Three White Soldiers patterns create an early signal that sellers have left the market and that an emerging uptrend might be forming in its earliest stages.
Three White Soldiers Candlestick Pattern trading strategy
The Three White Soldiers Candlestick pattern can be found on daily, weekly, and monthly charts. So, it can be used for forex day trading and forex swing trading.
There are a number of ways to trade when you see the three white soldiers pattern. First, confirm the signal using appropriate technical indicators such as the stochastic oscillator or the relative strength index (RSI). This can help to validate what the candlesticks are signalling, because indicators can provide more insight into price trends.
For example, if you see three white soldiers at the bottom of a downtrend and you think a reversal is coming, you can test the signal using the RSI. This indicator can help you to predict price trends because it tracks the speed and momentum of the market. If the reversal is confirmed, you may want to open a long position (buy).
For a more complete forex trading strategy, the Three White Soldiers can be used with other technical analysis.
Three White Soldiers Candlestick Pattern buy strategy
- Look for the pattern in a downtrend.
- Wait for the price bar to go bullish before entering.
- Set a stop-loss near the recent low from the Three White Soldiers.
- Exit the trade when the price level drops.
Three White Soldiers Candlestick Pattern sell strategy
- Locate the pattern in a downtrend.
- Wait for the price bar to go bearish before entering.
- Set a stop-loss near the recent high before Three White Soldiers.
- Exit the trade when the pattern appears.
Three White Soldiers Candlestick Pattern conclusion
The Three White Soldiers can be an indicator of a trend reversal if used with other technical indicators. The volume of the pattern could be considered before trading the Three White Soldiers.
The Three White Soldiers Candlestick Pattern can be used on your trading platform charts to help filter potential trading signals as part of an overall trading strategy.
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