Three White Soldiers Pattern: What It Is, Indicates, and Examples

what is three white soldiers

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Using Trend Reversal Indicators – RSI and Stochastic Oscillator

  1. Low volume trading periods can result in anomalous candlesticks emerging, and if this happens with Three White Soldiers, the pattern may prove to be less reliable.
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And by the time the Three White Soldiers pattern is completely formed, the price is likely to be near a resistance zone from where it might turn around. Yes, the sample size is low I agree, but that’s because the pattern is rare to find, and even then, the numbers don’t look great. The best 10-day performance rank for the three white soldiers candle belongs to downward breakouts in a bull market. “Nevertheless, after a downward breakout (of the Three White Soldiers) in a bear market, the price can drop 7.66% on average, over 10 days, but that uses just 56 samples. Three White Soldiers in a downtrend can simply be a reaction/pullback after a down leg before the price goes even lower. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.

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what is three white soldiers

What is the three white soldiers pattern?

As you can see, it consists of three green candles, each of which opens and closes progressively higher than the last. The candles have either very small or no wicks, signaling intense buying pressure from traders, who maintain prices at the top of each session’s range. There are no gaps with this pattern, meaning that each candle should open within or at the top of its predecessor’s body. A Three White Soldiers (TWS) pattern is formed when three back-to-back strong bullish candles are printed on the chart after a downtrend.

Candlestick Body and Color

In that case, you should consider it an indicator to exit your trade before the market reversal gets fully underway. Ideally, the second candle’s body should be slightly bigger than the first, which is a more powerful signal that a bullish reversal is underway. Explore the range of markets you can trade – and learn how they work – with IG Academy’s free ’introducing the financial markets’ course.

Without volume this pattern has a higher probability of rolling over, thus stopping you out of your position. This can occur after a clear bear trend down or after a stock retreats to the bottom of a trading range. Contextually, it can come when there is a lack of supply in the market after a heavy sell off, signaling a big reversal.

The first rule for the pattern is that you need clean candles with decent size. Several other chart patterns bear similarities to the three white solders, each with its own nuances and predictive capabilities. Except for one big BUT – in all sources known to me, the three white soldiers is considered a reversal pattern. Harness the market intelligence you need to build your trading strategies. Trade up today – join thousands of traders who choose a mobile-first broker. The biggest drawback of the Three White Soldiers pattern is that it can occur during a consolidation period.

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As you can see, there are three strong bullish candles taking the price action higher to ultimately create a strong reversal. The three white soldiers and the three black crows candlestick patterns are reversal patterns that predict a change in the direction of a trend. Both patterns consist of three consecutive candles, which makes them less frequent than some other candlestick patterns.

The significant move higher could also reach key resistance levels where the stock could experience a period of consolidation before continuing to move higher. The bears use this opportunity to create three consecutive bearish candles, and therefore change the trend direction. What follows is a strong push lower as the bulls were unable to capitalize on the initial bullish momentum. The Three White Soldiers is a bullish Japanese candlestick reversal pattern consisting of three consecutive white bodies, each with a higher close. It’s fairly common to see gaps in charts for other assets like stocks or commodities, which are subject to market trading hours. If an event happens outside of trading hours, it’s possible that trading for the next session opening with the event already price in, resulting in a gap on the candlestick chart.

These candles all need to finish in the positive and the candles cannot breach the low of the prior candlestick. It is easy to see that before going into continued growth after the formation of the pattern, the price previously made a corrective move. My personal experience shows that in most cases it is worth waiting for exactly this behavior of the asset. The price going into growth immediately is extremely rare, although this also happens. 1) The model will be considered stronger if the upper shadows of the candles are extremely small or completely absent. No matter your experience level, download our free trading guides and develop your skills.

This is more of an anticipatory strategy if you sense heavy demand in the tape or Level II. After the completion of the formation you can make a decision to add or cut the trade depending on the context. Perhaps buy a 50% retracement from the high of the pattern, if you get that. Trying to time the bottom can be difficult and risky, you never know when the stock could flush lower, stopping you out.

Therefore, the Three White Soldiers pattern can be taken as an entry or exit signal, depending on how you use it. Three White Soldiers is a bullish indicator that typically occurs at the end of a bear trend, indicating a reversal is about to happen. 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. Feel free to ask questions of other members of our trading community.

When a bullish candle closes with small or no shadows, it suggests that the bulls have managed to keep the price at the top of the range for the session. Basically, the bulls take over the rally all session and closed near the high of the day for three consecutive sessions. In addition, the pattern may be preceded by other candlestick patterns suggestive of a reversal, such as a doji or a hammer. 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.

Three white soldiers patterns are made up of three consecutive bullish candlesticks. Each candlestick should open inside the previous day’s candle and have a higher close than before. Three white soldiers patterns, aka three advancing soldiers patterns, are candlestick patterns on stock charts.

In addition, each candle must have a relatively long body and opening price above the closing price of the previous candle, ultimately creating a shape of the “V” letter. However, the silver lining in the EYES example is that we did retest the high of the third soldier candle two times, and both times held the new trend well. However, depending on your trading style, you may find this pattern difficult to trade for a few reasons shared below. Everything you have read on the internet probably praises this formation and the power of its trend forecasting capabilities. After a steep selloff into a support zone, DK prints three white soldiers with decent volume and the stock shot back up to the most recent swing high. The stock had a minor pop back up to the downtrend line only to drag lower into the close.

Like the other examples, note the massive volume signature on these Three White Soldiers marching to new highs. 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 alpari review stock also did not make the sizeable move we would have hoped for with this setup. However, the stock topped out at that point and developed a range. One of the first interesting points is that the stock has a sharp move upward at the open and then immediately rolls over.

Moreover, in the right context it can signal a reversal of a trend. In this post we’ll discuss the context, requirements, and a free video on how to trade this pattern. The ETF had been in a strong bearish downtrend over the course of several weeks before the three white soldiers pattern marked a sharp bullish reversal. The pattern may suggest that the rally will continue, but traders should also look at other relevant factors before making a decision. The three white soldiers is a bullish reversal pattern which occurs in a strong downtrend and signals a change in direction.

Each bullish candlestick has a close higher than its opening price and closes above the previous candle. This validates the candlestick pattern and provides an additional signal for an upcoming trend reversal. The Three White Soldiers pattern provides a clear bullish signal, acts as a strong confirmation of an existing uptrend, and offers potential early entry opportunities. Traders can use this pattern to enhance their analysis, increase confidence in their trading decisions, and capture significant price movements. Harmonic patterns are used in technical analysis that traders use to find trend reversals.

The three white soldiers pattern and its bearish counterpart, the three black crows, are considered fairly robust reversal signals by both analysts and traders. The bullish pattern consists of three consecutive long-bodied candlesticks that open within the previous candle’s real body and close above the previous candle’s high. Many Japanese candlestick patterns come in pairs, and Three White Soldiers is no exception. The opposite pattern is Three Black Crows, illustrated by a set of three red candlesticks indicating a downward market trend. In direct contrast to Three White Soldiers, Three Black Crows is a bearish signal that emerges as a bull market is about to enter a reversal. Three white soldiers patterns are made up of all bullish candlesticks.

The three white soldiers mean that there is a steady advance of buying pressure following a downtrend. Bullish patterns like these often signal a reversal of price movement. Some traders consider opening a long position to profit from any upward trajectory when they see the three white soldiers pattern.

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