Three Soldiers and Crows

The three soldiers candlestick formation is a reversal pattern predicting the reverse of a trend. This pattern will form at the end of a downtrend and it is a signal that the balance of power has shifted from the sellers to the buyer.

This pattern will form in the following steps.

  • There is a downtrend to start the pattern followed by 3 consecutive bullish candles
  • The bodies of the second and the third candlestick should be roughly the same size, if the third candle is much smaller the first two then it can indicate weakness by the buyers and could invalidate the pattern.
  • The candle also has to have small or no upper wicks

What else you need to look out for

When looking at the size of the candles although a dramatically smaller candle for the last one may indicate weakness in the pattern, if one of the candle bodies is far larger than the other it can mean that the price has advanced or declined too quickly leaving the market overbought or sold and not that there will be a sustained break.

The size of the wicks on the candles is also a very important factor. Many traders will tell you that there should be none but you will rarely ever find this and most patterns will have small wicks. If the wicks are larger than the body of the candle, then I would advise caution in following it.

Conclusion

The three white soldier’s candlestick pattern follows as a bullish reversal 82% of the time. What that means is, it is more likely to breakout upward after the pattern than it is to breakout downward and close below the lowest of the three candles. This also works in the reverse for the three black crows. Overall with such a high probability rate this can be a great strategy to add to your overall portfolio of strategies but due to its rareness, it cannot be used as your only trading pattern.

The reverse of this pattern is called the three black crows and indicates a reversal from an uptrend. It will have the following properties.

  • There is an uptrend followed by three consecutive down candles
  • The bodies of the second and third candles should be roughly the same size and again if the last candle is much smaller this could indicate weakness in the pattern.
  • Again they should have small or no wicks.