How to Master the Three White Soldiers Candlestick Pattern

When financial markets start recovering after a previous downtrend, traders look for technical indicators that signal buyers are stepping in. The Three White Soldiers candlestick pattern is one of the most recognized bullish reversal patterns in technical analysis tools.

It suggests that buyers are in control and may push the closing price higher on the price chart. However, relying on this trading pattern alone can lead to false signals. Context, confirmation, and risk management strategies make all the difference.

This technical analysis guide breaks down how the Three White Soldiers chart pattern works, what it tells traders about market sentiment, and how to use it effectively.

The Three White Soldiers pattern structure is a bullish candlestick formation that appears after a long-term downtrend. It consists of three consecutive bullish candlesticks, each opening within the previous candlestick’s body and closing near its high. This structure signals strong buying pressure and a possible shift in market conditions from bearish to bullish.

Key Characteristics:

• Appears after a downtrend.
• Consists of three consecutive bullish candlesticks.
• Each candle opens within the previous candlestick’s body and closes near the high.
• The pattern suggests a strong shift in market sentiment from bearish to bullish.
• Bullish indicator of increasing buying momentum and control by market bulls.
• Often appears near key support levels, confirming a potential bottom formation.

Traders see this bullish reversal signal as a sign that buying momentum is building, but they often wait for additional confirmation before entering a trade.

The Three White Soldiers candlestick pattern is illustrated below.

• Forms after a downtrend.
• Three strong, bullish candles in a row.
• Each candle opens within the previous white candle’s body.
• Each candle closes near its high, showing continued buying pressure.
• The pattern suggests a strong shift in control from sellers to buyers.

The Three White Soldiers pattern consists of three consecutive bullish candles, each opening within the previous candle’s body and closing near the high, signaling strong buying pressure.

The Three White Soldiers pattern is a technical indicator of market sentiment. After a strong bearish downtrend, buyers step in aggressively. The first candle signals early bullish interest, the second confirms continued strength, and the third shows sustained buying momentum.

This pattern suggests sellers are losing control, and buyers are driving the closing price up with little resistance. However, if the move is too strong or happens with extremely large candles, it could indicate a short-term overbought condition rather than a valid reversal pattern.

To further validate market structure, traders often look at break-away price gaps to determine whether a new trend has begun.

The Three White Soldiers pattern is most effective after a downtrend, suggesting a possible potential trend reversal. If it appears in a sideways market, it may signal the start of a new bullish trend. However, in strongly trending bull markets, it could simply indicate trend continuation rather than a reversal formation.

Volatility Considerations

In high volatility environments, the Three White Soldiers pattern may lead to false breakouts if buyers quickly lose interest. In low-volatility environments, the pattern can carry more weight, as it indicates sustained buying pressure with fewer sudden reversals.

A trading toolkit that incorporates stochastic oscillators can help confirm momentum strength.

• Stop-loss placement: Below the low of the first candle in the pattern.
• Entry strategy: Experienced traders often wait for a pullback or additional confirmation from a fourth bullish candle before entering long.
• Profit target: Use resistance levels or a risk-reward ratio (e.g., 2:1) to set realistic exit points.
• Potential profit should be assessed relative to risk level and market conditions.

• No follow-through buying: If the next candle is bearish, the reversal signal weakens.
• Overbought conditions: If the pattern forms after an extended rally, it could indicate exhaustion rather than continuation.
• Strong resistance nearby: If the pattern forms just below a key resistance level, a bearish reversal setup could occur instead of a breakout.
• Bearish market sentiment in larger time frames may override the pattern’s strength.

To trade the Three White Soldiers in a systematic trading strategy:

1. Identify a previous downtrend before the pattern forms.
2. Detect a Three White Soldiers chart pattern with three consecutive bullish candles.
3. Require confirmation: Enter long only if the next candle closes higher.
4. Set stop-loss and take-profit orders below the low of the first candle.
5. Backtest before using real capital.

Traders should always test historical data before working on the trading strategy.

Below is a simple AFL script to detect the Three White Soldiers in Amibroker:

// Three White Soldiers AFL Code for Amibroker

FirstCandle = Ref((Close > Open) AND (Close > Ref(Close, -1)),-2);

SecondCandle = Ref((Close > Open) AND (Open > Ref(Open, -1)) AND (Close > Ref(Close, -1)),-1);

ThirdCandle = (Close > Open) AND (Open > Ref(Open, -1)) AND (Close > Ref(Close, -1));

ThreeWhiteSoldiers = FirstCandle AND SecondCandle AND ThirdCandle;

This script finds Three White Soldiers patterns in downtrends and marks them with a green star.

The Three White Soldiers candlestick pattern can be an early sign of a bullish reversal formation, but it must be confirmed by trend confirmation. It appears after a downtrend and signals that buyers are gaining strength, but traders should always backtest it and use it in the right market structure.

Using risk management strategies and waiting for confirmation can help avoid false signals. If you want to incorporate this pattern into your investment strategy, test it in different market conditions before using it in live trading.

Links to articles about other Candlestick Patterns

1. Doji
2. Hammer
3. Inverted Hammer
4. Bullish Engulfing
5. Bearish Engulfing
6. Morning Star
7. Evening Star
8. Shooting Star
9. Hanging Man
10. Piercing Pattern
11. Dark Cloud Cover
12. Three White Soldiers
13. Three Black Crows
14. Dragonfly Doji
15. Gravestone Doji
16. Spinning Top
17. Marubozu
18. Tweezer Top
19. Tweezer Bottom
20. Bullish Harami 
21. Bearish Harami
22. Rising Three Methods
23. Falling Three Methods
24. Bullish Abandoned Baby 
25. Bearish Abandoned Baby 
26. Bullish Kicker 
27. Bearish Kicker
28. Three Inside Up
29. Three Inside Down
30. Upside Gap Two Crows
31. Mat Hold
32. Upside Tasuki Gap
33. Downside Tasuki Gap