Market got you down?

Watch for the Three White Solders – this is a trading signal that the markets may be about to reverse. The pattern we're looking for here is three consecutive long candlesticks that have an opening price within the previous candle's body, and a closing price above the previous candle's high. These candlesticks will be white or green, indicating upward price movement.

Watch the wick as well

Ideally, the wick or shadow should not be long. A candlestick closes with little to no shadow when bullish buyers have kept the price near the top of the range. In this scenario, the market rallies for this asset and closes the day's high for three consecutive periods.

Entry and exit

If you're buying (bullish), then watch for this pattern as a signal to enter the market early. If you're selling (bearish), this signal tells you to wait for a more profitable exit that may be soon coming. When watching trading signals, it's prudent to look for confirmation in other indicators, such as the Relative Strength Index (RSI).

Watch the volume

Consolidation periods can also show patterns like the three white soldiers. Avoid this trap of continuing the existing trend by watching the trading volume behind the formation of this pattern. Low volume patterns are suspect because the market is reacting to the movements of only a few players than the majority.

Trading Signals, Patterns, and Indicators