What is a Three White Soldiers Pattern?
The Three White Soldiers pattern is a bullish candlestick pattern that is used to predict the reversal of the current downtrend. The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle’s real body and a close that exceeds the previous candle’s high.
The opposite pattern of the three white soldiers is called the three black crows, represented by three consecutive red candlesticks that occur at the top of an uptrend.
What does the Three White Soldiers Pattern Signal?
The Three White Soldiers pattern signals that there is already a steady increase in buying pressure following a downtrend. It unfolds across three candles and represents a strong price reversal from a bear market to a bull market. The three white soldiers help to confirm that a bear market has ended and the market sentiment has turned bullish.
Trading the Three White Soldiers Pattern
Looking at the chart of Bitcoin on the 4-hour time frame, we can see a lot of three white soldier patterns formed as BTC makes its way up to reach new highs. There are multiple three white soldiers that are visible on this chart not marked out, and I didn’t mark those ones out because they are just continuation patterns of the initial move upwards, not a reversal. Anyways, the start of the uptrend is painted by two sets of three white soldiers patterns that sets off the initial bull market, followed later by a second set of three white soldier patterns as it makes its way up to test previous highs.
Looking at the chart of Apple on a 4-hour time frame, there is a key indicator of a three white soldiers reversal pattern. As Apple is going into earnings, these three white soldiers formed along the uptrend acting as support. After these three white soldiers formed and the earnings were released after hours, the stock pumped beyond $100 ($400 pre-split), eventually making its way up to $130 ($520 pre-split) before falling down.
Differences Between the Three White Soldiers and Three Black Crows Pattern
The Three Black Crows and Three White Soldiers candlestick pattern are the exact opposite of each other. The Three Black Crows consist of three consistent red candles in the market, while the three white soldiers pattern consists of three consistent green candles in the market. The Three Black crows signals the bears overtaking the bulls, while the Three White Soldiers signals the bulls overtaking the bears. Think of the black crows as being bearish and the white soldiers painting a bullish momentum.
Limitations of the Three White Soldiers
The Three White Soldiers candlestick pattern doesn’t necessarily paint a bullish picture. This pattern can very well paint a falling three methods pattern where the three white soldiers, three consistent green candles, actually are in the middle of painting bearish momentum moving down. When trading this pattern, look to see if this pattern shows up at the bottom of the bearish momentum or at the start of the bearish momentum. This makes a huge difference and definitely is a limitation to this pattern if its found at the start of the bearish momentum.
