{x} | Trading.live

Three White Soldiers

Three white soldiers is a bullish candlestick pattern that is used to predict the reversal of the current downtrend in a pricing chart. 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. These candlesticks should not have very long shadows and ideally open within the real body of the preceding candle in the pattern.

In the daily chart, we can understand that this pattern appears after a downtrend. The bears are exhausted, and the bulls are able to push the price upward. They continue this ascension for three trading sessions, forming a strong reversal. Their continuous progression conveys their strength, and it shifts the market from a bear market to a bull market.

Looking at the chart, once the formation has completed, traders can look to enter at the open of the very next candle. Traders should be cautious even if it is in bullish market trend, so that the stop loss must be set below the low of the three white soldiers for insurance. Additionally, a target level should be placed at the previous levels of resistance or previous area of consolidation . Since there are no guarantees in the forex market, traders should always adopt a good risk management.