Three Soldiers Candlestick Pattern: A Trader’s Guide | TrendSpider Learning Center (2024)

2 mins read

The Three Soldiers Candlestick Pattern is a well-regarded strategy in the world of technical trading. Therefore, recognizing and learning to use its unique structure can be a powerful addition to your trading toolkit. In addition, this pattern applies to various periods, making it a versatile strategy for long- and short-term traders.

What is the Three Soldiers Candlestick Pattern?

The Three Soldiers Candlestick Pattern, also known as ‘Three White Soldiers’, is a bullish reversal pattern that consists of three consecutive long-bodied candlesticks. They are typically seen after a period of downtrend or during a period of consolidation. Here are some key characteristics:

• Each candlestick opens within the previous candle’s body.
• Each candlestick closes higher than the previous, reaching a new high.
• Finally, each candle has a small or no lower wick, emphasizing the strength of buyers.

How to trade the Three Soldiers Candlestick Pattern

The Three Soldiers Candlestick Pattern is primarily used to signal the reversal of a downtrend. This means traders can consider entering a long position or closing a short one when this pattern emerges. Here are some guidelines:

1. Confirmation is key: Wait for the third candlestick to close and confirm the pattern. Acting too soon can lead to false signals.
2. Consider the context: Ensure the pattern appears after a clear downtrend or in a period of consolidation. It’s less reliable if it occurs during an uptrend.
3. Look for volume: An increase in trading volume during the formation of the Three Soldiers can provide extra confirmation of a bullish reversal.

Example scanners based on Three Soldiers Candlestick Pattern

Three Soldiers Candlestick Pattern can be used in Scanning the market. To see how exactly it can be used in this way, we provide the following sample. This is a scanner that searches the market for stocks using this pattern.

Practical Trading Tips

Adopting the Three Soldiers Candlestick Pattern into your trading strategy can be beneficial, but remember these tips:

1. Use with other indicators: As with all trading patterns, the Three Soldiers should be used in conjunction with other technical analysis tools for better accuracy.
2. Be patient: Wait for the pattern to form fully before making a trading decision. Patience often pays off in trading.
3. Manage your risk: Always set stop losses and profit targets to manage your risk effectively.

An Example of Three Soldiers Candlestick Pattern

Imagine a scenario where you notice a clear downtrend in your chosen market. Suddenly, you spot the first candlestick of the Three Soldiers pattern. It opens within the previous candlestick’s body and closes at a new high. The second candlestick follows suit, and so does the third, each one confirming the strength of buyers. Trading volume also increases, which confirms the bullish reversal. This would be an ideal time to consider going long or closing a short position.

The Three Soldiers Candlestick Pattern is a valuable tool in any trader’s arsenal. It’s a clear, visual way to spot potential reversals and make more informed trading decisions. But, as always, practice makes perfect – so try spotting this pattern in historical data before using it in your live trading.