Three White Soldiers Candlestick Pattern in Trading Explained

Below is an example of the three white soldiers’ pattern on the AUD/USD 1H chart. Someone on our team will connect you with a financial professional in our network holding the correct designation and expertise. Ask a question about your financial situation providing as much detail as possible. Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications. Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others.

Three white soldiers signal reversal from a downtrend to an uptrend because of the strong buying pressure. This candlestick pattern is formed after a long downtrend when the bullish forces are more than the bearish forces for three consecutive days. There are some conditions that need to be fulfilled to identify this pattern on the candlestick charts. One should watch if the volume is supporting the formation of three white soldier. As a triple candlestick pattern, the three white soldiers pattern consists of three consecutive bullish candlesticks at the bottom of a downward trend. Traders interpret this charting formation as an indicator of a price reversal and the end of the selling pressure.

You’ll be able to build your confidence on the financial markets in a risk-free environment with £10,000 in virtual funds. On the other hand, three white soldiers indicate a shift from the bears to the bulls and is made of three consecutive bullish candlesticks. Also known as the Three Advancing White Soldiers, this candlestick pattern is used for predicting reversal from a downtrend to an uptrend. Three white soldiers candlestick is a multiple candlestick pattern used to analyse charts of stocks, currencies, commodities, etc.

The second and third candles should be approximately the same size as the first candle, confirming that the bulls truly are in control. Harness the market intelligence you need to build your trading strategies. No matter your experience level, download our free trading guides and develop your skills. Discover the range of markets and learn how they work — with IG Academy’s online course.

Each candle typically opens within the previous candle’s body and closes higher, creating a stair-step pattern of higher highs and higher lows. This pattern can help enhance trading strategies, improve risk management, and increase the probability of successful trades in various financial markets. It is the location of the candle pattern that determines whether it is a pattern or not. Therefore, do not look for the three white soldiers pattern in the very bottom of the chart.

When the pattern emerges, traders may consider entering long positions, anticipating the beginning of a new uptrend. In sideways or range-bound markets, where prices oscillate within a narrow range, the pattern may not provide meaningful insights or clear signals. Traders should be mindful of market conditions and adjust their strategies accordingly. Like any technical analysis pattern, the Three White Soldiers can produce false signals.

Remember The Trade Might Take Some Time to Work…

Proper risk management, such as setting stop-loss orders and considering risk-to-reward ratios, is crucial when utilizing the Three White Soldiers pattern. After the Three White Soldiers pattern has formed, the price might consolidate for a while before moving again. For the Three White Soldiers pattern, and other long strategies in general, the zone of opportunity is in the consolidation or pullback that follows after the price has made a higher high. A trader must clearly understand where the zone of opportunity lies for their trading strategy. 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.

It’s a lightning-fast trading platform that integrates with most major brokers. It has all the trading indicators, news sources, and stock screening capabilities that traders like me look for in a platform. Their march forward conveys their strength, shifting the sentiment from bearish to bullish. In general, you can use any other technical analysis tool to come up with important data points.

Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. This pattern is represented by three consecutive red candlesticks that occur at the top of an uptrend. The close happens above the close of the preceding candlestick, and the open happens inside its actual body. A simple visual pattern that denotes the reversal of an uptrend is represented by three black crows and the reversal of a downtrend by three white soldiers. Two of the most effective indicators to confirm trend reversals are the Relative Strength Index (RSI) and the Stochastic oscillator.

Three White Soldiers Candlestick Pattern (The Essential Guide)

Whether it is the Fibonacci retracement or extension, trend lines, moving averages, it doesn’t matter as long as you have empirical evidence that the particular level is important. While the wide stop loss makes it challenging, the high probability that the price action is reversing is partially offsetting the main weakness. While on the other hand we risk more, the fact that the reversal is all but confirmed makes it easier to commit to a trade. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate.

Knowing these levels can help you make informed decisions, whether you’re entering or exiting a trade. Learn how to calculate and use pivot points in your trading strategy by checking out this detailed guide. So you’ve identified the Three White Soldiers pattern on your candlestick chart.

1. 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.
2. The distances between the entry and stop loss are sometimes longer than even 200 pips, as is this case.
3. The stock had a minor pop back up to the downtrend line only to drag lower into the close.
4. Someone on our team will connect you with a financial professional in our network holding the correct designation and expertise.

Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. The three black crows candlestick pattern is the opposite of the three white soldiers. The opening price should be within the real body of the second candlestick most preferably between the midpoint and closing price of the second candlestick. These candlesticks do not have long shadows and open within the real body of the previous candle in the pattern. Then, stop loss could be placed at the lowest level of the first candle or the 0.0% Fibonacci level (which is the lowest level of the previous price range).

Traders who are short on the security look to exit and traders who are waiting to take a bullish position see the three white soldiers as an entry opportunity. Except for one big BUT — in all sources known to me, the three white soldiers is considered a reversal pattern. StocksToTrade in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications broker liteforex or websites. In addition, StocksToTrade accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, should it be construed as advice designed to meet the investment needs of any particular investor. Setting a stop-loss below the first soldier can help minimize potential losses.

Why the Three White Soldiers Pattern Is Important for Traders

As a reversal pattern, it often emerges at the beginning of a new uptrend, indicating a potential shift in market sentiment. The formation of Three White Soldiers reflects a significant shift in market sentiment. It signifies a transition from a bearish sentiment, characterized by selling pressure, to a bullish sentiment, driven by increased buying pressure.

The Three White Soldiers pattern is a bullish candlestick formation that signals a strong reversal from a downtrend to an uptrend. This pattern is a must-know for traders looking to capitalize on momentum shifts in the market. It’s a reliable indicator of buying pressure and a potential change in market sentiment. The three white soldiers pattern is a bullish candlestick formation on a trading chart that occurs at the bottom of a downtrend. As the name suggests, the pattern consists of three candles, which are green in colour. Traders believe that this formation signals an upcoming price reversal because of the strong buying pressure.

Understanding the Three White Soldiers Pattern

This pattern is often seen as a strong indicator of a reversal from a bearish trend to a bullish one. 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 coinjar reviews 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. The three white soldiers mean that there is a steady advance of buying pressure following a downtrend.

Incorporating proper risk management techniques is crucial when utilizing the Three White Soldiers pattern. Traders should determine appropriate stop-loss levels to protect against potential downside risks. Combining the pattern with other indicators, cryptocurrency brokers canada such as moving averages or trendlines, can provide a more comprehensive view of the market and enhance decision-making. This approach helps to strengthen the reliability of signals and reduce the potential for false interpretations.