Most traders crave trend reversals, as they offer opportunities to sell or short positions. However, it can be challenging to confirm a trend reversal by merely glancing at an eToro chart. Knowledge of specific candlestick patterns is crucial in signaling reversals. One popular pattern signaling a bearish-to-bullish trend reversal is the Three White Soldiers pattern.
In this guide, we’ll share everything you need to know about the Three White Soldiers pattern and how it can elevate your trading performance.
Table of content
- 📖 The Three White Soldiers Pattern Explained
- 💂♂️ What’s in a Name?
- 🕵️♂️ Identifying the Pattern
- 💡 Implementing the Three White Soldiers Pattern in Trading
- 🔍 Finding the Correct Pattern
- 🎯 Ideal Entry Points and Stop-Loss Levels
- Maximizing Your Success with the Three White Soldiers Pattern
- 📈 RSI and Volume: The Dynamic Duo
- 🧩 Combining Forces: Pairing with Other Reversal Patterns
- Practice Makes Perfect: Trading the Three White Soldiers on eToro
- Trading Technical Analysis: • Learn more📝
- Trading Basics:
- Candlestick Patterns:
- Contrarian Trading and Pattern Recognition:
- Trading Patterns and Strategies:
- Market Sentiment and Volatility:
- Technical Analysis:
- Trading Patterns:
- Trading Features & Strategies:
- Indicators & Analysis:
- Market Conditions & Trading:
- Disclaimer And General Risk Warning applicable and relevant to all platforms listed
- Author & Expert Trader - Financial Analyst:
📖 The Three White Soldiers Pattern Explained
💂♂️ What’s in a Name?
The Three White Soldiers pattern is a bullish reversal pattern occurring after a bearish or downtrend. Comprising three consecutive long green candles, each subsequent candle opens near the previous candle’s closing price.
The name stems from its appearance. In the past, chart candles were either white (bullish) or black (bearish). As the pattern features three consecutive white candles, it’s named accordingly. The term “soldiers” signifies the pattern’s “strong” buying signal, as soldiers are known for their courage, strength, and forward movement.
🕵️♂️ Identifying the Pattern
The pattern’s structure highlights buyers’ strength and the sellers’ waning presence. The strength of buyers is further confirmed if the candles have minimal tails or none at all.
💡 Implementing the Three White Soldiers Pattern in Trading
🔍 Finding the Correct Pattern
Identifying the correct pattern is straightforward. Traders should look for three consecutive bullish candles with sizable bodies and minimal tails. Remember, the pattern develops at the end of a downtrend, so focus on markets with this attribute.
Consider the following examples from actual eToro charts:
Three White Soldiers Pattern on DJ30
In this DJ30 stock example, the pattern formed after a quick downtrend. The earlier candle after the reversal isn’t included in the pattern because its tail is nearly 50% of its body. A pattern with a long tail—10% or more of the body—is considered invalid, as ignoring this detail could result in significant losses.
Following the pattern formation, the trend continued upward for an extended period.
Three White Soldiers Pattern on OIL
In this OIL asset example, the Three White Soldiers pattern appeared twice: once after a major downtrend and another after a shorter downtrend. Both pattern formations showcase three consecutive bullish candles with substantial bodies and minimal or no tails at all.
As mentioned earlier, smaller tails indicate stronger buying pressure, which propels the market toward a continued uptrend.
🎯 Ideal Entry Points and Stop-Loss Levels
When dealing with the Three White Soldiers pattern, the ideal entry point is a level above the last candle. Conversely, the optimal stop-loss level is at the base of the third candle.
Maximizing Your Success with the Three White Soldiers Pattern
📈 RSI and Volume: The Dynamic Duo
When trading the Three White Soldiers pattern, pay close attention to overbought and oversold indicators using the Relative Strength Index (RSI). The RSI reveals whether an asset is overbought or oversold, helping you make informed decisions.
Confirming the breakout with volume is also crucial. Each candle should have significant volume to ensure the continuation of the bullish trend. A thick candle body and small shadows are positive signs, indicating that buyers are in control and pushing the price higher.
🧩 Combining Forces: Pairing with Other Reversal Patterns
The Three White Soldiers pattern can be even more effective when combined with other candlestick patterns. Common pairings include the Doji, Double and Triple Bottom patterns, and the Head and Shoulders pattern. Familiarizing yourself with these patterns can help you spot the Three White Soldiers pattern more easily and take advantage of its potential.
Practice Makes Perfect: Trading the Three White Soldiers on eToro
The best way to hone your skills in trading the Three White Soldiers pattern is by using the eToro trading platform. eToro offers a virtual portfolio that lets you trade with virtual funds, allowing you to access real trading scenarios without risking actual money.
Armed with the knowledge and insights from this guide, you’re now equipped to master the Three White Soldiers pattern on eToro and make more informed trading decisions. Join now!
Trading Technical Analysis: • Learn more📝
Contrarian Trading and Pattern Recognition:
Trading Patterns and Strategies:
Market Sentiment and Volatility:
- Bearish Engulfing Pattern
- Bullish Engulfing Candle Stick Pattern
- Morning Star and Evening Star
- Morning Star Pattern
- Railway Tracks Candlestick Pattern
- Shooting Star Candlestick Pattern
- How to Use Triangle Pattern
- How to Trade Three White Soldiers Candlestick Pattern
- Rainbow Pattern
- Understanding Flag Patterns
- How to Trade Bullish Engulfing Pattern
Trading Features & Strategies:
Indicators & Analysis:
Disclaimer And General Risk Warning applicable and relevant to all platforms listed
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