Three White Soldiers Candlestick Pattern

Three white soldiers is a bullish candlestick pattern which indicates reversal of current downtrend and start of upward trend. It is considered as one of the most reliable trading pattern if it is formed after a prolonged downtrend or after consolidation of a downtrend. As name suggest, three white soldiers pattern consists of three long white (clear or bullish) candlesticks, each closed higher than previous day’s close.

The requirements of bullish three white soldiers pattern include,

• The pattern should be formed after a significant downtrend.
• There should be three long white candlesticks each with a new high.
• The opening price of each candlestick must be with in the body of previous candlestick.
• Second and third candlestick should have closing prices near to their highs.

Three white soldiers candlestick pattern best favors swing traders and position traders. The idea is that the prices of instruments should be at their lowest levels after a prolonged downtrend and the market will be ready to go up; and the increasing prices will force short-sellers to cover their positions. Reliability of three white soldiers pattern increases with 1) increase in length of candlesticks, 2) shortening of upper shadow (high price) of second and third candlesticks, 3) with increase in trading volume, and 4) and when the opening price of candlesticks are at or around mid-point of previous candlestick. Remember, if three white soldiers can formed at the top of an uptrend, it may indicate a near-future market reversal.

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