The Three White Soldiers is a bullish reversal pattern consisting of three consecutive white candlesticks, each with a higher close and an open within the previous candlestick’s body. It is a Japanese candlesticks pattern used to predict the reversal of the current bearish trend. The pattern shows a shift in power from the sellers to the buyers, and it indicates a rise in the price unless a sign appeared to invalidate the bullish trend.
A good strategy to follow is to trade preferably after the formation of the first white candlestick, where it covers the previous bearish candlestick, because at this point the bullish candlestick has already formed a Bullish Engulfing Pattern. Upon completion of the pattern, which means the closing of the third consecutive white candlestick, the trader can add to his position and trade with the trend. The other way is to trade after the complete formation of the pattern, the closing of three consecutive white candlesticks.
The Three White Soldiers patterns are excellent set-ups to trade; the pattern ranks third out of 103 successful candlestick patterns and types, where first is best. This pattern is used often in Forex Trading Signals and Managed Forex Accounts.
The Three White Soldiers pattern forms as follows:
- After a downtrend, there are three consecutive candlesticks.
- The bodies of the second and the third candlesticks should be approximately the same size – if the third candlestick is visibly smaller than the preceding two candlesticks, this means that the buyers are not completely in control and may indicate weakness among the buyers.
- The candlesticks have small or no upper shadows.
Sometimes upon completion of this pattern, market participants who entered the market after the first candlestick book their profit, which will reflect on the chart with a small black candlestick, however, a break out from the high of the third candlestick should be expected. Sometimes the price continues to rise for a fourth day before showing the black candlestick on the fifth day.