The stock had a minor pop back up to the downtrend line only to drag lower into the close. As we stated earlier, the volume must accompany the setup in order for the signal to carry real weight. Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning. The Bullish Bears team focuses on keeping things as simple as possible in our online trading courses and chat rooms. We provide our members with courses of all different trading levels and topics.

Watch this video to learn how to identify and trade the three white soldiers pattern with real trading example. Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff. But we also like to teach you what’s beneath the Foundation of the stock market. We also offer real-time stock alerts for those that want to follow our options trades. You have the option to trade stocks instead of going the options trading route if you wish. The Bullish Bears trade alerts include both day trade and swing trade alert signals.

Sellers had fewer opportunities to drive prices down, implying a firm stance by buyers. You can use Moving Averages (MA) with the three white soldiers pattern to pinpoint dynamic key price action levels, such as your possible entry, stop loss, and target profit areas. Similar to the RSI, you can use the MACD with the three white soldiers pattern to help identify shifting market sentiment. As shown, there are two lines—the blue and orange lines—you need to pay attention to. There is usually a consequential price action when these two lines cross over. Antonio Di Giacomo studied at the Bessières School of Accounting in Paris, France, as well as at the Instituto Tecnológico Autónomo de México (ITAM).

For the first time in the past eighteen months, Bitcoin best forex times exceeded $40,000 during those three days. Only two days following the creation of the pattern, Bitcoin reached a peak of over $44,000. That reflected an almost eighteen percent increase within merely five days. The Three White Soldiers pattern highlights three consecutive days (or bars) of upward closes that mark growing optimism. This triple-candle buildup shows that the market has moved from indecision or negativity to a more bullish stance, often indicating a chance for traders to ride an upswing.

How to Trade the Three White Soldiers Candlestick Pattern?

The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. Skip the pattern if a major news release is minutes away, as spreads can widen and push the price erratically. Look at a higher timeframe to be sure you are not buying into a long-term resistance zone.

• This check ensures that momentum did not fade immediately after the trio formed.
• You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources.
• On its own, it has a moderate to high reliability, especially when it appears after a clear downtrend and is supported by volume or key technical levels.
• It’s built on price action alone, making it usable without relying on indicators.

Is the three white soldiers candlestick pattern in an uptrend a sell signal?

• The pattern is employed to determine the possible buying opportunities.
• Here is an example of three white soldiers appearing in a pricing chart for the VanEck Vectors Fallen Angel High Yield Bond exchange-traded fund (ETF).
• In addition, the pattern may be preceded by other candlestick patterns suggestive of a reversal, such as a doji or a hammer.
• Traders must look for the pattern to appear on a more extended time frame chart to establish a bullish trend.
• We teach day trading stocks, options or futures, as well as swing trading.
• Once the first soldier prints, it’s followed by two more bullish candles, each opening within the previous candle’s real body and pushing to a higher close.

Whichever option you pick, ensure it aligns with your broader strategy. One technique is to enter on or shortly after the third candle’s close, securing the pattern’s completion. Another method is waiting for a minor pullback after the third candle, aiming to catch the price slightly lower. If you were to buy three white soldiers at the confirmation of the last candle, that’s three really large candles to set a stop against.

In any other market condition (i.e., during an uptrend or in a sideways market), the three consecutive bullish candles are just normal candles that do not serve as a reversal pattern. Like any trading pattern, the reliability of the three white soldiers depends on numerous key factors, including market conditions, market sentiment, and external confirmations. The three white soldiers chart pattern indicates that the bearish market sentiment driving the asset’s price down is diminishing and possibly shifting into a new bullish trend. This shift can be attributed to “bargain hunting,” where buyers overwhelm sellers because they believe the asset is worth much more than its current trading price. Hence, this results in a significant price increase within just three trading sessions.

Does volume always confirm the Three White Soldiers candlestick pattern?

Performance can vary by asset, timeframe, and overall market environment. Shorter timeframes (like intraday charts) might see a higher failure rate due to noise, whereas daily and weekly charts sometimes show more sustained follow-through. The pattern appears after a downtrend, correction, or period of sideways movement and signals that buyers are stepping back in with confidence. It shows momentum shifting away from sellers as each bullish candle builds on the last. Traders look for it at major support zones or after oversold readings, using the structure to plan long entries. Similar to three white soldiers, the inverted hammer is also a bullish reversal signal.

Trading Basics

On its own, it has a moderate to high reliability, especially when it appears after a clear downtrend and is supported by volume or key technical levels. Studies suggest it can have a success rate of 55% to 70% when combined with confirmation indicators and proper risk management strategies. In the above example, a trader will enter a long position when the third bullish candlestick is completed with a stop loss at or below the lowest level of the first candle. Take profit should be placed at the highest level of the previous bearish trend. To find the Three White Soldiers pattern in a chart, start by looking at areas where the market has been in a clear downtrend or moving sideways after a drop.

Reliable Bullish Candlestick Pattern

The pattern often appears after several sessions of bearish activity, or when the price has stalled following a steady decline. You may notice smaller candles or indecisive moves just before the shift, which often signals that sellers are losing control. The Three White Soldiers pattern indicates consecutive buying strength over three sessions or bars. Each closing price finishing near the candle’s top suggests bullish sentiment carried through to the end of the trading period.

If it’s money and wealth for material things, money to travel and build memories, or paying for your child’s education, it’s all good. We know that you’ll walk away from a stronger, more confident, and street-wise trader. Our watch lists and alert signals are great for your trading education and learning experience. For professional-grade stock and crypto charts, we recommend TradingView – one of the most trusted platforms among traders. The financial products offered by the promoted companies carry a high level of risk and can result in the loss of all your funds.

If you do not agree with any term of provision of our Terms and Conditions, you should not use our Site, Services, Content or Information. Please be advised that your continued use of the Site, Services, Content, or Information provided shall indicate your consent and agreement to our Terms and Conditions. Use the free download of our Candlestick Patterns PDF to find more alternatives and formations. Otherwise, you might wait for a pull back to retest the demand in these three candles and take your long position there.

You can use the Bollinger Bands with the three white soldiers pattern to identify key price ranges. Hence, the middle band can act as a dynamic support or resistance level. On the other hand, the upper band (in red) can serve as the next key resistance after the middle band. The three white soldiers candlestick pattern is typically observed as a reversal indicator, often appearing after a period of price decline. This chart pattern suggests a strong change in market sentiment in terms of the stock, commodity, or forex pair making up the price action on the chart. The three white soldiers pattern and its bearish counterpart, the three black crows, are considered fairly robust reversal signals by both analysts and traders.

That’s right, sometimes the soldiers may print on the chart, but these are not always your front line heroes. So, in this example, while SBAC did not roll over, the stock also did not make the sizeable move we would have hoped for with this setup. Without volume this pattern has a higher probability of rolling over, thus stopping you out of your position.