Three white soldiers, as the name suggests is a three candle pattern and belongs to the bullish reversal family. Often called as three advancing soldiers, due to the fact that it signifies the end of a downtrend and marks a clear indication in the balance shift from sellers to buyers.
How do you spot a three white soldiers pattern?
Spotting this pattern is easy! You can do it in four easy steps
- The very first thing you need to make sure is that a short term downtrend is in progress.
- Next, this downtrend must be followed by a trend reversal, three green candles, each with a higher close, this is the formation of three white soldiers.
- Now, if you’ve spotted three candles, make sure each of these candles closes at or near its highs. You can do this by checking the price closes in the top 30% of the day's rang for that day.
- Although not a rule, each subsequent candle should open within the previous session’s real body. An open at or a little higher than the previous session’s real body is also valid.
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What’s happening in the market? How does this pattern form?
Three White Soldiers represents a trend reversal, after a sharp downtrend or at a low price area.Its successive higher highs and higher lows are indicative of a bullish market ahead.
What action to take in case of Three White Soldiers?
In case you’ve spotted a Bullish reversal in Three White Soldiers, go ahead and buy a third white candle. Ideally you should put a sell-stop below the lowest low of the last three candles.