Three White Soldiers: A Complete Guide

Chart patterns can predict the turning point in the financial market. This article will guide you about the white soldier pattern in brief detail.

1. What are the three white soldiers ‘ patterns?

A candlestick pattern with three white soldiers indicates a reversal in the current trend in a price chart. Candlesticks with long bodies open above the high of the previous candle and close within the previous candlestick's real body. The shadows of these candlesticks should be very short, and they should open within the preceding candlestick. Three green candles are used to make this pattern. This formation is considered to indicate an impending price reversal because of the strong buying pressure. Those three black crows are reversed versions of the three white soldiers. The pattern is usually seen at the top of an uptrend when three consecutive red candlesticks occur. Three white soldiers are considered a bullish reversal pattern by technical traders.

Furthermore:

• The first candle should close at about 50% of the red candle's range

• The second candle should close above the red candle's open

• The third item is a long green stick. This is now the beginning of the new bull run.

There is a little or no upper wick on the three green candles. Each period ends at or near its highest price due to sustained buying pressure from bulls, which overwhelms bears' resistance. You may come across three white soldiers in a market consolidating even if the pattern typically forms after a sharp downward trend. Bullish signals are less important here.

Pattern Trading Tips

It takes three data points across a time frame for the three white soldiers pattern to signal momentum and a high probability of the market shifting upward from a downtrend or range-bound if that was the market's behavior before this pattern. When you find the design, you can trade it in several ways. To begin with, use technical indicators like the relative strength index (RSI) and stochastic oscillator to confirm the signal.

Indicators offers more insight into price action than candles alone, which can help validate what the candles are signaling. The RSI can test signals, such as the three white soldiers appearing at the bottom of a downtrend. By tracking the market's momentum and speed, this indicator can help forecast price movements. Upon confirmation of a reversal, it may be a good idea to buy long. Any of the three soldiers is the best place to enter your buy position. However, you will be better off taking a trading position on the first soldier.

In addition to other bullish indicators, the 'three white soldiers' pattern confirms that the market is moving into an uptrend. When strong moves occur off oversold support, this pattern is more likely to work. A chart entering an overbought zone increases the chances of not working.

How to identify the three white soldiers pattern?

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To identify the three white soldiers' pattern by finding three consecutive green or white candlesticks. The candlesticks need to open and close progressively higher than the previous one. There should be no wicks on the candlesticks, and their bodies should be big as The pattern is most likely to be seen at the bottom of a downtrend, as previously mentioned.

The example of the three advancing white soldiers 

You're following the GBP/USD exchange rate, which is opening at $1.23723. A price change begins when buyers and sellers enter the market. It hit a low of $1.23657, but buyers are putting a lot of pressure on the market, and the pair reached a high of $1.24293 before settling at $1.24211.

The bulls continued pushing the price higher the next day, reaching a high of $1.24958 before closing at $1.24873. The trend continues on the third trading day, with buyers bringing the GBP/USD price up to $1.25494 before closing at $1.25389. A three-white-soldier candlestick pattern is created by this upward movement, as seen below.

Where do the three white soldiers come from? 

The buying pressure following a downtrend, which means three white soldiers. Such patterns often indicate a price reversal.Traders often consider the three white soldiers' stock as an opportunity to profit from any upward trajectory.

The three white soldiers stock must meet several requirements. To qualify each example of the three white soldiers candlestick, traders should follow a three-step process:

• Market context — a bear market pattern must emerge

• Size of the candles - there should be three large green candles

• Volume confirmation — There must be an increase in trading volume in order to confirm a trend reversal

Market Context

As in most candlestick patterns, the proper context is crucial. In other words, the white soldiers must form at the end of a downtrend or near a key support level.

When the pattern appears inside of consolidation, it is less reliable as a trend reversal signal. Second, you do not earn much profit when you trade a ranging market because the pattern will soon run into resistance. 

In essence, traders must first identify a downtrend before the three white soldiers can show up to "save the day" as buyers defeat sellers. 

Candle Size

Another requirement for the three white soldiers is that each candlestick needs to be bold. I want the candlesticks to be bigger than other candles in the immediate vicinity. Furthermore, the second candle cannot exceed the middle price range of the previous day. The last candlestick cannot exceed the middle price range of the previous day. This suggests negligible selling pressure. Three green candles closing near the top indicate that the bulls have controlled the market throughout the entire session.

Volume Confirmation

The three white soldiers, last but not least, should also be supported by increasing volume. Vulnerability is a key indicator that confirms price reversals. Unless the volume increases, this might just be a bull trap that you should avoid. It is believed that the three white soldiers are accompanied by a low volume, which means there's no institutional buying.

To sum up, traders must ensure that there is a significant increase in volume to confirm the strength of the bulls.

What are the difference between the three white soldiers' pattern and the three black crows?

Candlestick patterns made up of three black crows are the opposite of those made up of three white soldiers. The black crows consist of three candles that have opened within the previous candle's body and closed below it. Unlike the three soldiers who depict the bears gaining control over the bulls, three black crows represent the bears gaining control. The similar caveats apply to both patterns regarding the volume and additional confirmation.

The three white soldiers' strategy involves buying as soon as the third candle closes and trading the following uptrend. Before you execute your trade, however, you'll want to be sure the uptrend is continuing. Unlike some other patterns, the three white soldiers' candlestick patterns are different because an uptrend is already underway at the end of the third candle. By the time you decide to join the movement, it has already begun to lose steam. 

On the other way, coin were the three black crows, the bearish equivalent of the three white soldiers. I have the exact opposite pattern - long green candles followed by three consecutive red candles. However, we can see that a downward reversal pattern is in place, indicating an upcoming bear run.

A three black crows candle, like its bullish brother, should follow these rules:

• The first should end halfway down the previous green candle

• T the second should fall below the open of the green candle  

• The lower wicks of a candle should be longer

As you can see how a bull market is quickly reversing due to mounting selling pressure. Trading three black crows entail opening a sell position after the final red candlestick. A second confirmation is necessary that the bear market is continuing. The time, though, you can wait for further downward movement - or examine whether the market is oversold before you enter a position.

In the case of the three white soldiers, the trend was in full swing when the volume remained strong.

What are the strategies to trade three white soldiers pattern?

If you see the three white soldiers' pattern, you can trade in several ways. First, confirm the signal with the help of appropriate technical indicators, such as the stochastic oscillator and RSI. Since indicators provide more insight into price trends than candlesticks, it can help to validate what the candlesticks are signaling.

You can test the reversal signal based on the RSI if, for example, you can see three white soldiers at the end. By tracking the market's speed and momentum, this indicator can help you to predict price trends. Upon confirmation of the reversal, you may want to open a long position (buy).

Confirmation of the three white soldiers

How do you ensure that the move isn't stalling out? The simplest method is to wait a little longer and place a buy order at the start of the next period if an uptrend persists.

A technical indicator could also be used to determine whether the market is overbought. You can also use the stochastic oscillator or the relative strength indicator.

The volume of the market can also give a good indication of a trend's strength. The upward movement should continue if volume stays solid - and buying pressure remains in place.

Whenever you see the three white soldiers chart pattern, you can trade it by following these steps:

1. Open an IG trading account or log in to your existing account

2. Tick the asset you wish to trade in the search bar

3. Enter the size of your position

4. Simplify your deal ticket by selecting either 'buy' or 'sell.'

5. Confirm your trade

Through $10,000 in virtual funds, you can build your confidence in the financial markets. In three white soldiers' trading, you open a buy position shortly after the third candle closes, and you trade the uptrend that follows. Nonetheless, you will want to confirm there is an ongoing bull run before executing your trade. Unlike many other patterns, the three white soldiers are characterized by an uptrend that has already begun by the end of the third candle. Thus, you run the risk of joining a movement that has already lost steam.

Limitations of Using Three White Soldiers

Candlestick patterns are not perfect in the world of technical analysis. Consequently, the three white soldiers' pattern has some limitations. Because previous performance is not indicative of future results, there is always a risk the trade may not go in your favor. The three white soldiers pattern has some valid reasons why trading with it can be challenging. 

The pattern requires mental strength because buying after a strong rally can be difficult as evidenced by the three green candles. If the highest price of this formation is broken, you initiate your buy position. Therefore, if you want to make a profit, you have to sell at even higher prices. 

A wider stop loss is necessary since the protective stop loss is placed below the first candle's low. I believe it's not worth the risk to open a long position if the profit potential is low (relative to the size of your stop-loss). It's possible to work around this issue by waiting for a pullback that may or may not occur, in which case there is a high risk of missing the boat.

Since reversals carry a high risk of losing money, many traders avoid trading them altogether. Trading with other technical indicators is necessary to overcome the limitations of the three white soldiers' pattern.As Traders often use the stochastic oscillator to confirm that a pattern is forming in an oversold area before initiating a long trade.

During periods of consolidation, three white soldiers often appear, which indicates a continuation of the trend rather than a reversal. What you should pay attention to is the volume supporting the formation of the three white soldiers. A pattern with low volume is suspect because it represents the action of a few rather than the majority.

To deal with the limitations of visual patterns, traders use the three white soldiers and other candlestick patterns in combination with other technical indicators, such as moving averages, trendlines, and bands. For instance, traders may look for areas of upcoming resistance before initiating long positions or look at the volume on the break out to confirm a high volume of transactions. As long as there is further confirmation of the breakout, traders may wait until low volume and near-term resistance to initiate long positions.

The presence of three white candles alone may not be sufficient to indicate substantial market movement. Because the upper shadow is almost non-existent and three consecutive rising candles are present, it is considered an upward trend reversal pattern. This can also occur after a short consolidation period.

The candlesticks with long bodies indicate too much upward pressure. This condition may occur when traders engage in overbuying, pushing the market too hard and too early at the onset of a trend reversal. Because of these uncertainties are critical to confirm with other trading tools and through volume in subsequent sessions.

Conclusion

It is concluded that a White soldier’s pattern is a powerful tool to trade for your benefit. Additionally, you can quickly identify the pattern, which can indicate market sentiment at a glance. As a result, it helps detect bullish trend reversals.

Using a practice account, you can hone your trading skill and learn how to identify the three white soldiers' pattern better if you're unfamiliar with it.

Candlestick patterns are an excellent way to assess market psychology and predict price movements. When learning a pattern, it's a good idea to start off with three white soldiers since it's easy to spot and a commonly used model. 

It is helpful for traders since it is relatively reliable compared to other candlestick patterns and, therefore, can be used by beginners who have not mastered other indicators. A more reliable signal can, of course, be obtained by confirming it with other trend indicators. 

• 3 White soldiers pattern is a candlestick pattern composed of three green or white candles that each close higher than the last.

• The pattern is most likely to be seen at the bottom of a downtrend.

• Three white soldiers indicate a steady advance of buying pressure, which may indicate a possible price reversal.