S11 — Three White Soldiers and Three Black Crows

Welcome to Phase 3 of our journey into candlestick patterns! We’ve covered the foundation with single-candle patterns and built on that knowledge with two-candle reversals. Now, we’re ready to elevate our analysis by looking at three-candle patterns, which often provide even stronger signals of a major shift in market sentiment. This article will focus on two of the most powerful and widely recognized three-candle reversal patterns: the **Three White Soldiers and the [Three Black Crows](https://www.thewallstreetbulls.com/candlestick-three-black-crows-pattern)**.

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These patterns are so significant because they don’t just show a momentary shift in power; they show a sustained, committed push in one direction, overcoming any immediate resistance from the opposing side. They signal a decisive victory in the battle between bulls and bears.

The Three White Soldiers: A Bullish Formation

The **Three White Soldiers** is a powerful bullish reversal pattern that appears after a downtrend. It is a clear and strong signal that buying pressure has taken control and a potential upward trend is about to begin.

How to Identify the Pattern:

1. Context: The pattern must appear after a clear downtrend. This is crucial for it to be a reversal signal.
2. Candle 1: The first “soldier” is a bullish (green or white) candlestick. It should close near its high, indicating the first sign of a shift in momentum.
3. Candle 2: The second bullish candle opens within the body of the first candle and closes higher than the first candle. It should have little to no upper shadow, demonstrating strong buying conviction.
4. Candle 3: The third bullish candle opens within the body of the second candle and closes higher than the second candle. Like the second candle, it should have a small or nonexistent upper wick, reinforcing the sustained buying pressure.

Why It’s a Strong Signal:

The Three White Soldiers pattern is a strong signal for several reasons:

• Sequential Strength: Each successive candle closes higher than the previous one, showing a relentless increase in buying power. This isn’t just a one-day anomaly; it’s a three-day show of force.
• Market Psychology: This pattern demonstrates that bulls are not only pushing the price higher but are consistently closing the market near the daily high. This strong close on consecutive days indicates that sellers are exhausted and buyers are in firm control.
• Momentum: The pattern shows momentum building. When a short-term trend is about to reverse, it doesn’t usually happen with a single large jump. The sequential, measured steps of the Three White Soldiers build confidence and attract more buyers, making the reversal more sustainable.

The Three Black Crows: A Bearish Formation

The **Three Black Crows** is the exact opposite of the Three White Soldiers. It is a powerful bearish reversal pattern that appears after an uptrend, signaling that selling pressure has taken over and a potential downward trend is imminent.

How to Identify the Pattern:

1. Context: The pattern must appear after a clear uptrend. This is what gives it its power as a reversal signal.
2. Candle 1: The first “crow” is a bearish (red or black) candlestick. It should close near its low, showing the first signs of a momentum shift.
3. Candle 2: The second bearish candle opens within the body of the first candle and closes lower than the first candle. It should have a small or nonexistent lower shadow, showing strong, committed selling pressure.
4. Candle 3: The third bearish candle opens within the body of the second candle and closes lower than the second candle. Similar to the second candle, a small lower wick indicates that sellers maintained control throughout the trading session.

Why It’s a Strong Signal:

The Three Black Crows pattern is a strong signal for the following reasons:

• Consistent Selling Pressure: Each day, sellers are able to push the price lower and close it near the daily low. This consistent decline over three sessions shows that bears are dominating the market.
• Erosion of Gains: This pattern effectively erases the gains of the previous uptrend, forcing buyers who may have entered at the top to re-evaluate their positions.
• Psychological Shift: The pattern suggests a major psychological shift. The relentless selling day after day creates a sense of panic and capitulation among buyers, which can accelerate the new downtrend.

Strict Rules for Formation

For both patterns, the rules for formation are quite strict. A pattern is only considered valid if it meets the following criteria:

• Location: The pattern must form after a clear, established trend (downtrend for Three White Soldiers, uptrend for Three Black Crows).
• Body Size: The bodies of the candlesticks should be relatively large, showing a significant movement in price. Short bodies would signal indecision and invalidate the strength of the pattern.
• Wicks (Shadows): The wicks should be very short or non-existent. Long wicks, especially on the side of the prevailing trend, can suggest rejection and indecision, which weakens the pattern.
• Sequential Closes: The most critical rule is that each successive candle must close below the previous one for the Three Black Crows or above the previous one for the Three White Soldiers. There should be no overlap between the bodies in a way that would suggest a struggle for control.

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By following these strict rules, you can filter out false signals and focus on the most reliable candlestick formations. The Three White Soldiers and Three Black Crows are not just charts; they are visual representations of a decisive victory by one side of the market, which is why they are so valued by traders.

Up Next: S12 the Morning star and Evening-star