Three white soldiers

The pattern is three consecutive long rising candles. The name comes from Japanese candlestick charting, where a rising candle was drawn white; on most charts today the three candles are green. Steve Nison lists it as three advancing white soldiers.

The idea is a staircase. Each candle starts a little below the previous close, inside the previous body, and then closes above it. Buyers absorb the early selling in every period and finish each one near the high.

In crypto and forex a candle usually opens at the previous close, so the open sits at the top edge of the previous body. Traders accept that as long as the other conditions hold.

• Prior trend – a decline or a long flat base. The pattern is a reversal signal, so it needs something to reverse.
• Three rising candles in a row, each with a long body.
• Each close is higher than the previous close.
• Candles 2 and 3 open within the body of the candle before them, not above it.
• Each candle closes near its high. Upper wicks are short.
• The bodies are of similar size. No candle is much smaller than the others.

One long rising candle after a decline can be a single burst of short covering. Three in a row, each closing near its high, show that buying continued for three periods and that sellers did not manage to push any of them back.

The pattern is a late signal. By the time the third candle closes, price is already well above the low. That is the trade-off: more evidence of a turn, a worse entry price.

In Replay mode on Charts you can step through past declines one candle at a time and see how price behaved after three long rising candles on your market.

• Entry – on the close of the third candle, or on a pullback into the body of the second or third candle. After three long candles a pullback is common.
• Stop – below the low of the first soldier. A tighter variant is below the low of the second candle.
• Target – the nearest resistance, the level where the decline began, or a fixed multiple of the risk.
• Position size – the stop is three candles away. Size the trade from that distance.
• Filter – rising volume across the three candles supports the reading. An RSI already in overbought territory after the third candle argues for waiting for the pullback.

Two look-alike patterns warn that the advance is weakening. In an advance block the three candles still rise, but each body is smaller than the one before and the upper wicks get longer: buyers are meeting more selling on every step.

In a stalled pattern, also called deliberation, the first two candles are long and the third is a small body near the high of the second. Both are read as a loss of momentum, not as three white soldiers.

Three black crows are the mirror pattern at the end of an advance: three long falling candles, each opening within the previous body and closing near its low. Three white soldiers are read as bullish, three black crows as bearish. Entry, stop and target are mirrored.

• Counting any three green candles – the bodies have to be long, the closes near the highs and the opens inside the previous bodies.
• Trading the pattern in the middle of an advance – there it is continuation at best, and late in a move it can mark exhaustion.
• Buying the third close with a full position – the stop is far and a pullback is likely.
• Ignoring long upper wicks – they turn the pattern into an advance block.
• Ignoring resistance overhead – three candles that end right under a strong level leave little room.