The three white soldiers' candlestick pattern is a bullish pattern that appears during a downtrend. It indicates an upcoming reversal of the prevailing downtrend in the market to an uptrend. There are numerous trading chart patterns but useful are those that are in the right context of the market. The three white soldiers' pattern is among those and is one of the most reliable patterns. Gregory L. Morris, a trading legend, in his book “Candlestick Charting Explained” said that the three white soldiers' candlestick patterns should not be ignored. He said it was the most reliable and rewarding pattern if traded correctly.
The pattern usually indicates a weakness in an established downtrend and the potential emergence of an uptrend.
Each candle should open within the previous body and the close should be near the high of the candle.
To identify the Three White Soldiers pattern, look for the following criteria:
- There must be three long and bullish (i.e., white or green) candlesticks in a row.
- Each of those candles must open above the previous day’s open. Ideally, it will open in the middle price range of the previous day.
- Each candle must open progressively upward, establishing a new short-term high.
- The candles should have very small (or nonexistent) upper shadows/wicks.
The Three White Soldiers pattern appears after a downtrend.
The bears are exhausted, and the bulls can push the price upward., marching forward for three trading sessions, forming a strong reversal.
Their march forward conveys their strength, shifting the sentiment from bearish to bullish.
Make sure to pay attention to the candles’ lengths.
The second and third candles should be approximately the same size as the first candle, confirming that the bulls truly are in control.
If the third candle is smaller (or shorter) than the first two candles, you may not want to question the Three White Soldiers.
This shift in size (or height) reduces the reliability of the pattern.
The biggest drawback of the Three White Soldiers pattern is that it can occur during a consolidation period. This can lead to mixed sentiment, so you can easily get trapped on the wrong side of the market.