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Chapter 9, Part VI. Triple candlestick patterns. Part 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Three white soldiers/Three black crows

    This is also a reversal pattern. As you can understand from the names, it consists of three white candles (Soldiers) or three black candles (crows). So, soldiers is bullish reversal signal, while crows is bearish. These patterns are more significant if appear after a long tendency or in an area of high/low prices. For instance, if the market was in a long-term bear trend, or price level near some long-term lows, the appearance of White Soldiers can give us an early notification about a tendency towards reversal. So, the same is true for Crows, but in terms of changing a long-term bullish tendency.

    Major properties of “Three white soldiers” pattern:

    - The close prices of all three candles should be at high level or very near to it. So, candles should have very small upper shadows – if upper shadows are completely absent – much better.

    - Opening prices of each candle should be inside the body of a previous candle.

    - The model will be more reliable, if the body of the first candle in the pattern will be above the low of previous black candle.

    - If open price of second and third candles coincide with the close price of a previous candle (first and second correspondingly), then this pattern treated as stronger one, and calls “Identical three soldiers” or “Identical three crows”

    - Pattern treated as stronger one, if it appears not just after long-term downward tendency, but after a sideway consolidation that separates the downtrend and the pattern.

    - Preferably, the second candle will be bigger than the first one and the third will be at least the same size as the second.

    - Preferably, if all three candles have no upper shadows, or if they do – these shadows should be very small.

    The same is true for Three black Crows, but from the opposite point of view. I hope that you will not have any problem to make change some words to opposite – “white” to “black”, “low” to “high”, “upper shadow” to “lower shadow” and etc…

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    Here is a perfect example of Three Identical Crows pattern on weekly AUD/USD chart. See, market was in a long-term upward trend for 3 years. But then three crows appeared. This pattern is perfect. The body of the first candle is below the high of the previous one (this is Doji). Second and third candles have very small lower shadows and their open prices are equal to close prices of previous candles. The Second candle is bigger than the first, and the third is bigger than the second. Unfortunately, such perfection is very rare…

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    Hamza Samiullah and fran alvarez like this.
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