Three White Soldiers Candlestick Pattern Guide

Three white soldiers and 3 black crows are multiple candlestick patterns that assist forex traders to analyze charts of various trading assets. On the one hand, the bullish three white soldiers’ candlestick pattern forms after a long downtrend to signal a bullish reversal. On the other hand, the bearish three black crows candlestick pattern forms after a long uptrend to signal a bearish reversal. Both formations are valid only and only if they arise after a trending move. because their efficiency diminishes with choppy assets. Learn the three white soldiers pattern and how to spot and trade this advancing pattern.

What is a three white soldiers pattern?

The three white soldiers formation appears on the trading chart at the bottom of a downside move as a bullish reversal candlestick pattern from a downtrend to an uptrend. As its name suggests, it contains three green candlesticks that occur after a long downward move. To explain, this strong buying pressure confirms an upcoming uptrend as bullish forces dominated bearish ones for three successive sessions. Besides, the 3 candlesticks of the white soldiers have no long wicks and open inside the real body of the prior candle that belongs to the pattern. In short, this pattern signals the ending of the prevailing downtrend as the three white soldiers candlestick may mark up a shift in the market sentiment with a buying force suppressing the selling pressure.

What is three black crows ?

The opposite pattern of the three white soldiers is named the three black crows. On the one hand, this bearish pattern contains three consecutive red candlesticks with elongated bodies. Second, the black crows form at the top of the prevailing upside move by pushing the price activity lower to signal a bearish reversal. Let us study the difference between the two patterns in the next section.

Difference between between them

The three black crows pattern is the opposite design of the three white soldiers pattern. To explain, the differences between the two patterns are the following:

First, the three white soldiers form at the top of an upside move. Whereas, the three black crows originate at the bottom of a downward movement.
Second, the 3 white soldiers pattern signals a bullish trend reversal from bears to bulls. But, the 3 black crows pattern signals a reverse in the direction from bullish to bearish.
Third, whereas the white soldiers formation contains three consecutive green candlesticks, the black crows structure comprises three successive red candles.

Pros and cons of three white soldiers pattern

Advantages

The 3 white soldiers and the three black crows candlesticks are important formations that belong to the reversal candlestick pattern. To explain, after a trending move, other market participants accumulate in the forex market to stage a reversal in the price activity. Visually, these three candlestick patterns seem to be forcing forward with no obstacle. hence, they assist FX traders to determine which market participants are beating the forex market and which trend is prevailing. However, these formations have some limitations.

Limitations

The major limitation is that the pattern confirms the new crypto market direction after a strong rally in the form of three bullish consecutive days. In other words, traders buy higher in order to sell even higher, which makes the trade much riskier. Because there is no 100% guarantee that the new trend will continue its bullish perspective after the three white soldiers or its bearish attitude after the three black crows. So, you need to buy high and sell even higher, which contradicts the famous citation “buy low, sell high”. Another limitation is that the considered structures may sometimes form during a consolidation phase in which the trader is got stuck.

How can you spot the three advancing white soldiers?

Before trading the advancing three white soldiers, chartists should spot it clearly on their price chart. Besides, the 3 soldiers pattern must satisfy some basic requirements first in order to visualize the formation. First, the pattern should develop at the bottom of a bear market. Second, the three consecutive candles must be in green or white color. Third, the same candles must have substantial size. That is to say, with a big real body and small or no tails. Finally, each candlestick of the 3 white soldiers pattern opens within the previous and closes progressively beyond it. Also, some investors believe that an uptick in volumes would confirm the trend reversal.

Example 1

We identify the three white soldiers pattern at the base of the prevailing downtrend, as a bullish reversal pattern. In detail, the formation characterizes 3 successive green candles that have an ample trading range. These candlesticks have relatively equal sizes with short superior and inferior wicks. Besides, the open price of each session must be within the altitude of the real body of the prior candlestick. Hence, the second session closes beyond the high of the first one. Similarly, the third candlestick of the 3 white soldiers closes exceeding the high of the second session of the pattern. Moreover, the lows of the second and third sessions are within the trading range of the prior daytime.

Example 2

The following Tradingview chart considers the H4 CAD/JPY pair which opened the session at C$88.054. Then bulls placed buying pressure on the exchange and the price started moving higher. In fact, the forex couple hit a high of C$88.329 and closed at C$88.260. During the next two trading sessions, buyers kept pushing the price up so that the GBPUSD closes bullish twice and at C$89.087 in the last one. In short, these three upside movements formed a 3 white soldiers candlestick pattern and confirmed the bullish reversal after a long downtrend move.

How do you trade with 3 white soldiers candlestick patterns?

Investors trade the three white soldiers pattern in order to get long entries and start to set buy positions. Alternatively, swing traders exit their short positions if they are already riding the prevailing downside move when the three white soldiers pattern prints on their candlestick chart. In other words, this reversal formation signals to exit and liquidate trades for short traders. Also, chartists can test the reversal signal by using an oscillator when they spot three white soldiers at the base of a downtrend. When the pattern and the oscillator confirm the reversal altogether then it is time to start a buy trade.

Trading example

The fact that the 3 white soldiers consist of three successive candles makes this candlestick pattern a less recurring reversal formation. The downer graph illustrates a three soldiers pattern on the BTCUSDT price chart. Here, the prevailing trend was a clear downtrend just before the formation led to a sharp bullish reverse in the price movement. To explain, the price action showed less volatility just before the three white soldiers candlestick pattern forms. This intimates a hesitation among forex market participants to continue in the same prevailing downtrend. Bulls seize the chance to drive the price higher and overwhelm the bears with three white soldiers.

As you can notice, three green candles take place to initiate a strong reversal and push the price activity higher. Moreover, the CMF_oscillator was growing and marked an oversold circumstance at the same time. Which confirmed the upcoming uptrend. However, this bullish reverse is not a surprising event as bears were able to push the coin price down previously for an extended period. In short, the three white soldiers candlestick pattern, combined with the suitable tools in the bullish reversal context, have confirmed an ending Bitcoin downtrend.

How to trade with those patterns?

Trading the three black crows candlestick pattern follows the same principle as the “white-soldiers” formation, yet in an inverse way. The following NZDUSD chart displays a sideways movement before the 3 black crows formation. This indicates that buyers were unable to sustain the prevailing bullish move and that a new high mark up. Consequently, sellers capture the opportunity and change the trend direction through three successive bearish candlesticks. Then bears keep pushing the price lower a control sign of the NZDUSD pair.

First, set an entry grade just where the third candlestick closes. Then, place a stop-loss near the most recent up. The wide stop loss is a little bit surprising at the beginning, which makes the trade success a challenge. Because you are already selling cheap with a long distance between the entries and stops. In fact, this is the major weakness of this three candle pattern. However, the high probability and the accuracy of the reversal after the three black crowns pattern formation offset this weakness.

Conclusion

The three white soldiers and the three black crows candlestick are reversal patterns. On the one hand, white soldiers mark up a new up. Whereas, black crows highlight a new down. On the other hand, three green soldiers suggest that there is a continuous improvement in the buying pressure. Which may translate into a bullish reversal. However, three red crows proffer that there is steady progress in the selling force. Which may translate into a bearish reversion.

Key takeaways

Three white soldiers is a 3-candle bullish pattern that consists of three successive green or white candlesticks after a strong downside move.
Three black crows is a 3-candle bearish pattern that contains three consecutive red or black candlesticks after a strong upward movement.
Candlesticks in both three soldiers and 3 crows patterns have equivalent sizes with minor or no wicks.

October 25, 2023