The Basic Form of Three Advancing White Soldiers Pattern
As the name Three Advancing White Soldiers or rather Three White Soldiers suggests, this pattern consists of three consecutive white candles. A typical Three White Soldiers formation preferably owns the following characteristics.
- The real bodies of the candles are not small and even relatively long
- The open of each candle falls into the real body of the previous candle
- The close of each candle is above the close of the previous candle
- The upper shadows of the candles are very small or do not exist at all (shaven head candles)
- The pattern appears at the bottom of a relatively sharp decline in the price
If a Three White Soldiers pattern owns almost all of these characteristics you may expect a serious bullish movement in the market (at least for the next few upcoming candles). The following image shows a pattern that shows most of these characteristics.
The sharp decline prior to the appearance of this pattern is a key feature that could confirm the bullish direction right after the third white candle.
If the white candles are very long then it may be too late to enter a long trade. This could be a significant sign of the market overbought. You may use your own judgment and experience to decide whether the candles are considered too long or the right size. One approach is to compare their sizes with other candles in the chart.
If you see the pattern after a consolidated market you may conclude a bullish movement as well. I, however, strongly suggest using other techniques to confirm such conclusion.
The Stalled Pattern
A common formation of Three White Soldiers is the Stalled Pattern also known as the deliberation pattern. In this formation the third candle is small in size. It could even gap above the second candle and create a rising window (see image). You must be cautious with the Stalled Pattern as it could show the end of the rally or at least a pause in the market. As you see in the following image when this pattern appears, the market stops rallying and then continues its decline.
The Advance Block Pattern
Another variation of the Three White Soldiers is the Advance Block Pattern in which the second and the third or at least the third candle is significantly smaller is size. The Advance Block pattern usually means that the pattern is not valid and you may not expect a bullish move (see image).
Just like any other candlestick reversal pattern Three Advancing White Soldiers could appear as a continuation pattern. Make sure that you understand the doubtful variations of this pattern. Also consider other aspects such as the direction of the market prior to this pattern and other technical tools to confirm the bullish implications of this pattern.
Locating the Three White Soldiers Formation in a Chart
The recognition of this pattern is subject to your judgement. I have developed an indicator that considers major objective characteristics of the Three White Soldiers. For example the indicator considers the fact that we are dealing with three white candles that each closes above the previous one (see image). You also need to consider other specifications of this pattern to decide whether the pattern is actually a Three White Soldiers or not.
Download the ThreeWhiteSoldiers Indicator [download]
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