Well, relax, these are the names given to two very specific reversal candlestick chart patterns shown below:
1- Three white soldiers pattern
The three white soldiers pattern is a bullish reversal candlestick pattern and here is how it forms:
- first the market has to be in a downtrend.
- next you have 3 green bullish candlesticks that form-giving you the three white soldiers chart pattern.
Usually when the three white soldiers pattern is formed, it signals the end of the downtrend.
2- Three black crows pattern.
The three black crows pattern is a bearish reversal candlestick chart pattern that consists of 3 bearish candlesticks.
Here is how the three black crows chart pattern forms:
- the market has got to be first in an uptrend.
- then three bearish candlesticks from-the three black crows.
Once the three black crows are formed, usually it signals the end of the uptrend.
HOW TO TRADE THE THREE WHITE SOLDIERS & THREE BLACK SOLDIERS PATTERN
Do you need to trade all the 3 white soldiers or 3 black crows patterns that you see?
No.
The location where these chart patterns form is very important. You want to be able to trade these chart patterns in areas of:
- support and resistance levels
- pivot levels.
- Fibonacci levels
It does make more sense to trade these chart patterns on these kind of level as there will be more significance involved.
THE TRADING RULES ARE VERY SIMPLE
- if a three white solider is formed, place a buystop order 3-5 pips above the high of the 3rd candlestick or if a three black crows form, place a sell stop order 3-5 pips below the low of the 3rd candlestick.
- Place your stop loss above the 3rd candlestick’s high if you placed a sell stop order or place a stop loss below the 3rd candlestick’s low if you entered a buy stop order.
- Take profits may be placed targeting previous swing highs or lows (peaks or bottoms).
- Move stop loss to breakeven when price moves by the amount risked or move stop loss to break even when price has made a swing high or swing low.
- Learn to take partial profits off the table when price moves at least halfway point to reach your take profit target level.
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