A trader’s guide to the three white soldiers candlestick pattern
The bullish three white soldiers chart pattern can be helpful in determining a price reversal following a downtrend. Learn more about this candlestick pattern and how you can trade when you recognise it.
What is the three white soldiers pattern?
The three white soldiers pattern is a bullish candlestick formation on a trading chart that occurs at the bottom of a downtrend. As the name suggests, the pattern consists of three candles, which are green in colour. Traders believe that this formation signals an upcoming price reversal because of the strong buying pressure.
The reverse of the three white soldiers is called the three black crows. This pattern is represented by three consecutive red candlesticks that occur at the top of an uptrend.
How to identify the three white soldiers pattern
To identify the three white soldiers pattern, look for three consecutive green or white candlesticks. Each must open and close progressively higher than the first. The candlesticks should have big bodies and very small (or no) wicks. As mentioned, you are likely to see the pattern at the bottom of a downtrend.
Three advancing white soldiers example
Say you’re following the GBP/USD price, which opens the trading day at $1.23723. As buyers and sellers enter the market, the price starts moving. It hits a low of $1.23657 but buyers are putting a lot of pressure on the market and the pair hits a high of $1.24293 before closing at $1.24211.
The next trading day, the bulls continue to push the price up, and it reaches a high of $1.24958 before closing at $1.24873. This trend continues on the third trading day, with buyers managing to get the GBP/USD price up to $1.25494 before it closes at $1.25388. These upward moves over the trading period create the three white soldiers candlestick pattern, as pictured below.
What do the three white soldiers mean?
The three white soldiers mean that there is a steady advance of buying pressure following a downtrend. Bullish patterns like these often signal a reversal of price movement. Some traders consider opening a long position to profit from any upward trajectory when they see the three white soldiers pattern.
How to trade when you see the three white soldiers pattern
There are a number of ways to trade when you see the three white soldiers pattern. First, confirm the signal using appropriate technical indicators such as the stochastic oscillator or the relative strength index (RSI). This can help to validate what the candlesticks are signalling, because indicators can provide more insight into price trends.
For example, if you see three white soldiers at the bottom of a downtrend and you think a reversal is coming, you can test the signal using the RSI. This indicator can help you to predict price trends because it tracks the speed and momentum of the market. If the reversal is confirmed, you may want to open a long position (buy).
Learn more about technical analysis
To trade when you see the three white soldiers candlestick pattern, you can use derivatives such as CFDs. With these financial products, you can trade rising and falling markets because you don’t take ownership of the underlying assets.
Follow these steps to trade when you see the three white soldiers chart pattern:
- Create an IG Bank trading account or log in to your existing account
- Type in the name of the asset you want to trade in the search bar
- Enter your position size
- Select ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
You can practise trading using the three white soldiers pattern with an IG Bank demo account. You’ll be able to build your confidence on the financial markets in a risk-free environment with CHF 20,000 in virtual funds.
Three white soldiers summed up
- The three white soldiers pattern is a bullish candlestick formation that consists of three green or white candles that each close progressively higher than the first
- You are likely to see the pattern at the bottom of a downtrend
- The three white soldiers mean that there is a steady advance of buying pressure, which could be translated as an upcoming price reversal
- To trade when you see the three white soldiers candlestick pattern, you can use derivatives such as CFDs
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