What is the Three White Soldiers? Numerous indicators are plotted on the chart and act as visual signals of future trends, one of these is the candlestick analysis. There is a simple pattern you should be aware of – the “Three White Soldiers”. Knowing when this pattern appears can indicate when it may be time to turn the market in your favor and make some money.

What is the Three White Soldiers Pattern?

The Three White Soldiers signal indicates that the market is changing direction from down to up. That is usually associated with the period when prices are generally declining towards the end of a certain period. This pattern is made up of three long green (or white) candles whereby each candle is longer than the other in terms of the length of its real body. This regime, when seen, suggests that buyers are intervening and prices may go higher as this regime might imply.

Why Is It So Important?

The three white soldiers pattern signals a market reversal from bearish to bullish, showing increased buying interest over three periods, indicating a new upward trend.

How to Spot This Pattern

To identify the Three White Soldiers pattern, look for these signs:

1. First Candle: After a period of falling prices, the first candle is a long green (or white) one. This shows that buyers are starting to take control.
2. Second Candle: The second candle is also green and opens within or close to the body of the first candle. It closes higher, which means the buying power is still strong.
3. Third Candle: The third candle continues the upward trend and closes near its highest point, confirming the market is reversing.

To make this pattern attractive, candles should have short or no tails, indicating strong buyer dominance. Increased trading volume during these periods suggests the bullish trend may continue.

Trading with the Three White Soldiers Pattern

Once you spot the Three White Soldiers pattern, you can think about using these strategies:

• Entry Points: Consider entering the trade at the start of the fourth candle or right after the third one closes, confirming the pattern.
• Stop-Loss Placement: To manage risk, place a stop-loss below the low point of the first candle. This way, if the pattern fails, you limit your losses.
• Take-Profit Levels: You can set your take-profit levels by looking at previous resistance points on the chart or by using a trailing stop to ride the trend as long as it continues.

Although this pattern signals a strong bullish trend, risks always exist. For example, if the pattern emerges after prices have been rising for a while, buyers might lose interest, and the pattern may not last long. To minimize this risk, always cross-check the trading volume and use other technical tools for support.