Unique Three River Bottom Candlestick Pattern

The unique Three River is a bullish reversal candlestick chart pattern; however, there is some evidence that suggests it may also behave as a bearish continuation pattern. The Three River pattern is made up of three-price candles. A bullish reversal pattern is formed if the price goes up after the pattern forms. For a pattern to be considered bearish, the price must continue to go down after it has formed. In this post, we will cover the unique Three River Bottom Candlestick pattern and a potential trading strategy that traders may use while trading with this pattern.

What is the Unique Three River Bottom Candlestick Pattern?

The Unique Three River Bottom is a bullish candlestick pattern comprised of three successive long-bodied candlesticks with no or very little upper wicks. An extreme bullish reversal is indicated by a sequence of three candlesticks, the first of which is red, the second green, and the third green. It is a candlestick pattern that is often interpreted as a strong signal of a potential market reversal because of its uniqueness. There are five conditions that must be met for a candlestick chart to be considered a unique Three River pattern.

  • The market is experiencing a downtrend
  • The first candle has a long real body that is bearish (close lower than open).
  • The second candle is a hammer with a lower shadow that establishes a new low.
  • The third candle has a short green body (close above open) that is below the true body of the second candle.
  • The third candle neither surpasses the peak nor the low of the second candle.

The long real body of the first candle shows that bears are in charge of the current trend, while the hammer pattern of the second candle shows that bulls are getting stronger after a long downtrend. When the open of the third candle is above the bottom of the previous period and the small green body shows signs of stability, there is a chance that the uptrend will continue.

These dynamics point to a possible bullish reversal from the downtrend, while there is some evidence that they commonly lead to a bearish continuation. The candlestick pattern should be used by traders in combination with other types of analysis, such as technical indicators or chart patterns over a longer timeframe.

Unique Three River Bottom Candlestick Pattern Strategy

When the third candlestick of the pattern forms, traders may want to consider going long on the currency pair while placing a stop-loss order below the low of the second candlestick. The trade’s goal might be established at a level equal to the pattern’s height, subtracted from the breakout point.

Before entering a trade, it is essential to remember that candlestick patterns should not be used on their own and should be confirmed by further technical analysis and fundamental research.

Here, the confirmation comes on the fourth candle or the candle after the pattern’s completion. A bullish reversal is more likely to be confirmed, and a long position with a stop-loss order below the low of the second candle may be taken if the price moves higher on the confirmation candle.

If the price continues to fall on the fourth candle, this would counter the bullish bias and suggest a possible price drop. In this scenario, a short position could be taken with a stop-loss above the second candle’s high. This pattern does not give a clear profit target. The trader is in charge of determining when and how much profit to take.

Buy Signal

Unique Three River Bottom Candlestick Pattern Buy Signal
Unique Three River Bottom Candlestick Pattern Buy Signal
  • Wait for the Unique Three River Bottom Candlestick Pattern to fully form on the chart of an uptrend or range-bound market.
  • Confirm that the fourth candle is bullish and closes above the first.
  • You may place a buy trade at the end of this bullish candlestick.
  • You may set your take-profit order just before the next level of resistance or according to your money management strategy.
  • You can place stop-loss orders at the low of the second candle (hammer) or in accordance with your money management plan.

Sell Signal

Unique Three River Bottom Candlestick Pattern Sell Signal
Unique Three River Bottom Candlestick Pattern Sell Signal
  • Wait for the Unique Three River Bottom Candlestick Pattern to emerge entirely on the chart before entering a down-trending market.
  • Confirm that the fourth candle is bearish and closes below the first candle.
  • You can place a sell order at the end of this bearish candlestick.
  • You may place your take-profit order just before the next level of support or in line with your money management strategy.
  • You can place stop-loss orders at the high of the second candle (inverted hammer) or in accordance with your money management plan.

Unique Three River Bottom Candlestick Pattern Pros & Cons

Pros

  • A strong bullish reversal signal that indicates a potential trend change
  • The three candles’ long lower wicks indicate that bears are losing control.
  • The small or no upper wicks suggest that bulls are driving prices upward.
  • It Can be used to validate other bullish technical indicators or chart patterns.

Cons

  • A single occurrence of the pattern may not be sufficient to signal a trend reversal.
  • False signals may be generated if the pattern is not confirmed by other indicators or if the market is in a range.
  • The pattern may also be unreliable if it appears in a market with low volume.
  • The pattern also lacks a profit target, therefore an alternative strategy is needed for taking a profit.

Conclusion

Therefore, the Unique Three River Bottom Candlestick Pattern is a possible market trend reversal pattern that may act as either a bullish reversal pattern or a bearish continuation pattern. When analyzing charts, traders should keep an eye out for this pattern, as it might be an indicator of a trend reversal in the market. Before making a trade, it is very important to confirm the pattern with other technical indicators and analysis.

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