The Three White Soldiers (also known as the advancing three white soldiers) is a healthy market reversal pattern and is one of many strong reversal candlestick patterns. It consists of three white (or green candles) with the second and third candles opening lower than the previous days close. They do, however close at a new high.
Criteria for the three white soldiers
- Each consecutive long candle closes with a higher open
- The second and third candlesticks open in the previous day’s body.
- Each day should close very near its high for the day
- The opens should be within the top half of the previous day’s body.
Pattern Psychology for the three white soldiers
After a downtrend, or a flat period, the presence of this formation suggests a healthy rally is going to occur over the next couple of days. This flat period is indicated by prices that stayed low for a long period of time. The market neared its bottom or was already at the bottom which suggests that sellers were present. By the end of each day the buying overcomes the early sellers and as in any rally, too much buying with little selling can be dangerous. Please note that this bullish reversal pattern does not require confirmation.
The average investor does not have to be dependent on the investment professional when utilizing candlestick patterns. Professional recommendations are not always in your best interest at the forefront. Whether totally unfamiliar with investment concepts or very sophisticated in investment experience, the Japanese Candlestick trading formations are easily utilized. The signals and patterns are easy to see and their interpretations are reliable.
Be sure to learn the twelve major candlestick patterns before you move onto the secondary candlestick patterns. You may want to begin with the doji, the engulfing signals, hammer signal, as well as the hanging man signal. Once you learn about the twelve major signals then move onto the secondary signals such as this three white soldiers signal.
Recognizing and understanding the psychology that forms the major candlestick patterns will provide completely new insights for investors to understand optimal times to buy and sell. Japanese rice traders realized that prices do not move based on fundamentals but instead that they move based on the investor perception of those fundamentals.
