What is and how can we integrate the Three White Soldiers candlestick pattern into our trading plan?

The Three White Soldiers Candlestick strategy is one of the basic patterns that are out there. Watch our latest video to learn what these soldiers can do.

Three White Soldiers Candlestick – a bullish pattern

Hello! So, today we have another Candlestick pattern to go over and see how can we integrate the pattern into our trading plan, one of the more basic trading patterns that are out there, Candlestick patterns, that is very easy to identify, but not so, I would say, common, you don’t really see it in everyday trading. So, this one is called, “Three White Soldiers”, and of course, as the name itself says, we are looking to find three consecutive candlesticks and, actually, three consecutive bullish Candlesticks since this is a bullish pattern, as we are looking to  buy the pair, after we have identified three consecutive bullish Candlesticks.

So, since this is a trend reversal pattern, we look for the downtrend first. So, as soon as we have identified the downtrend, like you can see here, then we are looking if we can find three consecutive long, green candles that indicate that the downside has finished, and we are looking to create an uptrend and we want to, of course, ride this uptrend and push the price higher. So, each candle must open progressively, upward, meaning that it should establish a new short-term high and one more, I would say, small, it’s not really a condition, in order to identify this pattern is that the weaks from these three candles, the upside weaks should not be really long, so you don’t want to see that the price pushed higher, but it did not close at the highs. So, what does this strategy really, really mean? Actually, as I said, this pattern appears after a downtrend, and it suggests that bears are exhausted and that bulls are taking control now, and they are starting to push the price upward. It creates a strong reversal and actually it shifts a market from bear to bull, and as you can see here, after you have identified three consecutive long bullish candles, you look for a small retracement, you enter the trade, you look for a Stop-Loss below the first candle, or below the low, and then you look higher to take your profits off the table. More importantly, this is not really a trade immediately pattern, but it should be used as a pattern to identify that the trend is changing and we are now entering the upside trend, meaning that we are looking to enter long trades after every retracement.

Here we have another chart. Again, Dollar/Yen hourly chart, you can see here that we’re pushing downside, we have a shallow retracement here, again, downside and then, three healthy, or in this case four, but we are interested in the first three candles, especially look at the first one and the third one, extremely long, green, healthy candles. We close almost at the top on both of them, and the second one is not so long, but still, it’s a healthy one, since the weak to the upside is not really long. So, the price closed near highs, and if you look at this, graphically, you don’t have to be a Forex expert to look at this and say, “This is a push higher and we are looking to create new highs, and we are looking to break this downtrend and we are looking for the price to push higher.” As soon as you have these three candles, this means that the downtrend has finished, and we are looking to enter into a trade on any retracement, to buy and to ride the trend. And you can see here, we create a high, higher high, higher high, higher high, higher high, so the price, more or less, pushed 100 pips on an hourly chart from when we have identified the Three White Soldiers pattern.