The Unique Three River Bottom is a bullish pattern and is somewhat characteristic of the Morning Star Pattern. This candlestick signal is formed with three candles and at the end of a downtrend a long black or red body is produced. The second day opens higher as it drops down to new lows and then closes near the top of the trading range. This is a Hammer-type formation and on the third day it opens lower but not below the low of the previous day. It closes higher and produces a white or green candle however it does not close higher than the previous day’s close. The Unique Three River Bottom Pattern is a rare pattern.
Criteria
- The candlestick body of the first day is a long black or red candle and it is consistent with the prevailing trend.
- The second day does a harami or hammer signal and it also has a black or red body.
- The second day’s shadow has set a new low.
- The third day opens lower but not below the lowest point of the previous day. It also closes higher but below the previous days close.
Signal Enhancements
The longer the shadow of the second day the greater the probability of a successful reversal.
Pattern Psychology
After a strong downtrend trend is in effect, the trend is further promoted by a long body black or red candle. The next day prices open higher but the bears are able to take prices down to new lows. Before the end of the day, the bulls bring prices back up to the top end of the trading range. On the third day the bears try to take down prices again but the bulls maintain control. If the following day sees prices going up to new highs then the reversal is confirmed.
Japanese Candlestick trading signals consist of approximately 40 reversal and continuation patterns. All candlestick signals have credible probabilities of indicating correct future direction of a price move.
Continue to learn about other candlestick patterns in addition to the Unique Three River Bottom Pattern.
